The strategy is as old as Chinese civilization itself–”buy low and sell high”. It seems some Chinese entrepreneurs are seeing gold in the demise and soon to be – rise of Detroit/Michigan and other locals in America.
Shanghai-based DDI Group, Dongdu International Group, bought the former Detroit Free Press and David Stott buildings in downtown Detroit and plans to redevelop the former newspaper headquarters into a $50-million apartment and retail complex.
Real estate is cheap in Detroit, especially compared to the soaring prices in China. The DDI Group paid $9.4 million for the 38-story David Stott, and $4.2 million for the Albert Kahn-designed Free Press building. Adding to the value for the Chinese investors and developers is the site is eligible for various local, state and federal tax credits for redevelopment. For a project such as this, the credits are likely to be nearly half or approximately $22 million.
A substantial building, built in 1925, the Free Press building consists of two six-story wings flanking a 13-story central tower.
China is increasingly investing its massive wealth directly into global companies, factories, real estate and other economic development projects creating jobs in America and return on investment for the Chinese.
China is currently the United States’ second-largest trading partner, its third-largest export market, and its biggest source of imports.
Michigan’s Governor Rick Snyder has been aggressively marketing Michigan as both immigrant and business-friendly and has been equally aggressive in courting Chinese investment. He has traveled to China three times in his first three years in office – compare that to his predecessor who preferred playing “Peking Duck” with China for domestic political reasons, never once traveling to China in her 8 years in office.
Chinese foreign direct investment in Michigan reached the $1 billion mark in 2012. Michigan ranks ninth in the U.S. for direct investment from China. To date, 95 percent of Chinese investment is automotive related. The investment potential in real estate, residential, industrial and commercial with low pricing and equally low interest rates makes Detroit and the entire state of Michigan an investment rich environment.
Chinese direct investment is spreading across America from nearly nothing only a few years ago to $10.5 billion last year.
In Wisconsin Chinese investors have helped finance:
- The new luxury Marriott hotel in downtown Milwaukee on Wisconsin Ave.
- The redevelopment of the former Pabst Brewing complex, which for years stood out as one of the most conspicuous symbols of Milwaukee’s urban decay.
- The expansion of the Racine manufacturing plant of jet engine start-up DeltaHawk Engines Inc.
- A 700-student dorm completed in 2010 at UW-Milwaukee, which has applied to use Chinese private investment to offset dwindling state financing. ( Chinese investment a growing trend in Wisconsin, nationally.
No one has applauded this investment louder than the Obama administration. Speaking in Beijing with Xi Jinping, who became China’s premier and president last year, Vice President Joe Biden said: “President Obama and I, we welcome, encourage and see nothing but positive benefits flowing from direct investment in the United States from Chinese businesses and Chinese entities. It means jobs. It means American jobs.”
The U.S. has much of what a rising Chinese middle and investment class wants and needs.
Pivot: from China “The Boogieman”- To China “The Investor” and U.S. Job Creator
It may be good U.S. domestic politics to rhetorically beat up on China to score points with beleaguered American workers, but it does nothing to build jobs-producing relationships with the fastest-growing large economy on the planet.
Rather than stirring fear, we need to be devising an aggressive plan to make China’s rise and globalization work for us. China can and must be part of the ingredients necessary to reinvent and revitalize America’s economy. Smart leadership in the public and private sector understand China’s continued rise does not need to come at America’s demise.
Anti-Chinese rhetoric not only fails to create a single American job, it makes the task that much harder by perpetuating anti-China and anti-Asian sentiment.
The Chinese market, with 1.3 billion people and a rising middle class, is the mother lode of 21st century global commerce. More than 300 million Chinese people have risen out of poverty in the last quarter century.
According to the China Global Investment Tracker, “China’s 2012 outbound investment set new records. North America jumped to the forefront of Chinese business activity.”
Investment goes where it is welcome and stays where it is nurtured. In Oakland, Michigan County Executive, L Brooks Patterson, a Republican, called for teaching of Chinese language, history and culture in all Oakland County schools back in 2006 to help prepare students for the flattened, global planet they will inherit — it has also made Oakland County an economic magnet for Chinese investment.
The Wall Street Journal reports, “There is an intensifying campaign to get Chinese investors to write checks in the U.S., evidenced by a recent red-carpet tour for 60 entrepreneurs and executives from China.”
Globalization And China: Here To Stay
“Globalization is no longer a theory, it is a reality,” proclaims Kenichi Ohmae in his book, The Next Global Stage: Challenges and Opportunities in our Borderless World.
He explains: “It [globalization] is going to grow stronger rather than weaker. It will feed on its own strengths. It is irresistible, and it is determined to have an impact on everybody — businessmen, politicians and bureaucrats, but, most importantly, on ordinary citizens. There is no use complaining about it or wishing it to go away. People will have to learn to live with it.”
Forward thing leaders are creating an environment for foreign capital to breed and grow and have embraced Ohmae’s worldview. This us allowing them to tap into the hundreds of billions of dollars the Chinese hold in trade imbalance and is helping to tilt the world in our direction to have some of that cash return to America through investment and trade.
Michigan like other progressive states has a strategy to seek foreign direct investment and to export our goods and services around the globe. By building bridges, rather than digging moats between the Great Wall of China and the Great Lake State of Michigan, benefits both peoples.
The report, US-China 2022: Economic Relations in the Next 10 Years -clearly demonstrates that economic ties between China and the US are inextricably linked and will produce a win-win situation not only for both countries, but all of humanity.
Remember the ancient Chinese saying about ‘beginning with a single step’? American leaders are stepping up and finding ways to build two- way economic bridges with China.
America is open for business and China is filling a void.
Tom Watkins has been working for more than 3 decades to build economic, educational and cultural ties between the US and China. He is advisor to the University of Michigan Confucius Institute, Michigan’s Economic Development Corporation and Detroit Chinese Business Association. Follow him on twitter @tdwatkins88