As the US economist Joseph Eugene Stiglitz has observed, some emerging economies transform domestic corporations' trade surplus into official foreign exchange reserves, typically US treasuries with a very low interest rate (yield rate of 3 to 4 percent).
The US accepts these "commodity dollars" then invests them in the capital markets of fast-growing emerging economies, especially in Asia, to obtain high investment returns (yield rate of 10 to 15 percent).
China's equity investment in the US was only $126.5 billion as of June 30, 2010, only 10 percent of the US' equity investment in China. In comparison, the United Kingdom holds $324 billion equity investment in the US, Canada has $298 billion, and Japan, $224 billion.
In the wake of the financial crisis, Barack Obama declared that the US economy needed "industry reconstruction", but this requires large-scale investment in technology, clean energy development and new industries.
Such investments would not only fundamentally solve the problem of "jobless growth", but also play a significant role in promoting structural transformation of the US economy.
But, Chinese companies, both private and State-owned, still suffer various obstacles when they seek to invest in the US, as Chinese investments are routinely rejected as "threats" to national security. Huawei Technologies, Angang Steel and China National Offshore Oil Corporation have all been frustrated in their bid to acquire shares in US projects in recent years. And Chinese products more often than those from other sources become targets of anti-dumping and intellectual property cases.
The anti-China rhetoric among many officials and politicians in the US means that it is in danger of missing out on huge overseas investments by China that could benefit both countries.
The author is an economics researcher with the State Information Center.
(China Daily 05/18/2011 page8)