China No. 1 Destination for Foreign Investment

NYTimes writes that “for the first time, China probably bested the United States as the world’s top choice for foreign investment” and ponders if China is a rival, partner or both.

China’s influence takes many forms that are subtler than the loss of low-wage manufacturing jobs in the United States or the opening of a huge new consumer market in China. The costs and benefits of the trans-Pacific relationship are much more complex than simple gains and losses from trade. They extend to the bedrock of the American economy, including the productivity of the labor force and the stability of financial markets.

China’s growth has been reinforcing one of the most prominent trends in America’s recent economic history: its transition from a manufacturing to a service economy. In the last two years alone, the economy has shed two million manufacturing jobs. Now, only about 16 million Americans work in manufacturing, the same as in the early 1950’s. Since then, though, the number of Americans in service professions has risen to 107 million from about 30 million.

China is “accelerating the structural change” taking place in the United States, said Daniel J. Meckstroth, chief economist of the Manufacturers Alliance/MAPI. “We’re moving the high-labor-cost jobs, the low-technology jobs and the low-capital-intensive jobs abroad.”

Lurking in the background is India with its services outsourcing, hoping to move the high-technology jobs overseas.


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Rajesh Jain

An Entrepreneur based in Mumbai, India.