Chinese firms make great leap forward — onto US soil

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Martha C. White , NBC News contributor/

U.S. manufacturing is getting a dose of medicine – Chinese medicine, that is. And while, like much Chinese medicine, it’s unpalatable to Americans, experts say it’s a salve the economy needs.

Chinese investors will sink as much as $7 billion into American companies this year, and there’s more where that came from. “I think there’s a good case to be made that the number’s going to be higher next year,” said Thilo Hanemann, director of research at Rhodium Group, a consulting firm. “In general, we are at the beginning of a structural trend. If you look forward to 2103, there’s quite a few deals in the pipeline we already know of.”

Rhodium’s $7 billion figure goes beyond manufacturing to cover all Chinese investment, like the pending deal between AIG, which is selling just over 80 percent of its airplane-leasing unit, and a consortium of Chinese investors.

Chinese investment in European companies has surpassed the $10 billion mark, Hanemann said, as the country flexes its growing economic muscle. A new report by the National Intelligence Council says China will surpass the United States as the world’s top economy before 2030. Predictions like this provoke worry among some people in the U.S., especially since the ambitions of its industry and state often are intertwined in China, but Hanemann said the concern is overblown.

Contrary to the belief that Chinese buyers will gut a company’s intellectual property and then move production to China, a Rhodium analysis of hundreds of deals over the past decade showed that Chinese involvement was more likely to preserve or grow rather than erode the local job market.

Manufacturing is especially good at this. “There’s a big ripple effect,” said manufacturing consultant Bill Waddell. “Manufacturing, more than any other industry, drags a big tail. It creates a lot of jobs outside the factory.” China’s interest in American manufacturing is concentrated in alternative energy, electronics, aviation and other high-skill industries. “Fairly expensive manufacturing are the things that are going to come back here,” he said.

And jobs in those industries tend to be good ones, said Jeff Strohl, director of research at Georgetown University’s Center on Education and the Workforce. More >>