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China, US sign $3.4b bilateral deals

By Chen Yang (Global Times)

08:00, June 25, 2012

Companies from China and the US signed a host of bilateral investments totaling $3.4 billion over the weekend, indicating the world's largest two economies are increasing cooperation to tackle the economic slowdown.

The 42 projects, mostly invested by US companies and spreading across 21 sectors such as manufacturing and environmental protection, were signed during a China-US economic cooperation and investment forum held Saturday in Nanjing, capital of East China's Jiangsu Province, the Ministry of Finance said in a statement.

The $3.4-billion agreements included investments by four Chinese companies in the US amounting to $70 million, the ministry said, without giving details of the companies.

"We hope that the investment from China will boost the US economy," US Department of the Treasury's Assistant Secretary Marisa Lago said at the forum.

"The economic slowdown in the US and Europe has offered Chinese companies opportunities to acquire cash-trapped local companies with relatively lower costs, but Chinese buyers still face legal barriers and some resistance from local labor unions," Feng Pengcheng, a professor at University of International Business and Economics in Beijing, told the Global Times yesterday.

"Local governments in the US are eager to attract investment from China to revitalize the economy, so Chinese companies can strengthen cooperation with them to break through investment barriers such as national security concerns set by the US federal government," Mei Xinyu, a researcher at the Chinese Academy of International Trade and Economic Cooperation under the Ministry of Commerce, told the Global Times.

"The US economy is slightly recovering, and Chinese companies can get good return on investment in sectors such as agriculture, especially if the products of the sector are sold in the Chinese market," Mei said, noting that former NBA star Yao Ming's investment in a US winery is a good example.

China has also become a safe haven and main source of income for many multinational companies during the global financial crisis, Vice Commerce Minister Gao Hucheng said at a meeting held Friday in Beijing, noting that so far 490 out of the world's top 500 companies have invested in China and established more than 1,600 research and development centers as well as regional headquarters.

For example, Japanese enterprises' investment value in China rose by 49.6 percent in 2011 from a year earlier, according to a white paper published Wednesday by the Japanese Chamber of Commerce and Industry in China.

China's huge market potential and greater purchasing power of the yuan have encouraged Japanese companies to increase investment here, according to the paper.

But the paper said Japanese companies are facing increasing costs such as labor, raw materials and taxes, as well as shrinking profit margins in their Chinese businesses.

"Foreign labor-intensive companies will gradually move their factories from China to low-cost countries such as Vietnam and Cambodia, while high-tech enterprises are likely to increase their investment in China," Feng noted.


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