U.S.-China political tensions make states wary of Chinese investment


“We wouldn’t rule it out,” agreed Paul Hughes, Kansas deputy secretary of business development. “But we’d have to do background” to make sure the Chinese investment doesn’t raise any red flags, he said.

China is a major export market for U.S. agricultural products from across the country, as well as manufactured goods such as autos and aircraft. It also represents a small but growing share of overall foreign direct investment in the United States, with a particularly significant footprint in California, New York, Illinois and Texas.

The current stock of Chinese direct investment in the United States is more than $54 billion by U.S. government estimates, and closer to $200 billion according to private sector analysts. Either figure is a tiny portion of the nearly $5 trillion foreign companies have invested in the United States.

A delegation of 100 Chinese Mainland and Hong Kong business officials attended this month’s SelectUSA Investment Summit, the U.S. Commerce Department’s premier annual event to entice foreign companies to put down stakes in the United States.

Eleven U.S. state governors and 5 territorial governors also attended, but it’s not clear if any met with Chinese firms. Erin Sweitzer, a spokesperson for the Indiana Economic Development Corp., sidestepped the question of whether Republican Gov. Eric Holcomb met with any Chinese firm by saying the Indiana delegation met with investors “from around the world.”

But she did not rule out possible future Chinese investment in the Midwestern state. “The companies that are good for Hoosiers, that are consistent with our focus on building an economy of the future with high-wage careers, get serious consideration,” Sweitzer said.

A spokesperson for Gov. John Bel Edwards also declined to say if the Louisiana Democrat met with any Chinese company at the SelectUSA event. Edwards skipped past China during a trade mission earlier this year that stopped in Japan and South Korea.

The Commerce Department was similarly tight-lipped about the number of meetings that Chinese companies had at the event.

One state delegation, however, was unambiguous about the possibility of meeting with the Chinese.

“Absolutely not,” said T.J. Villamil, senior vice president for international trade and development at Florida Enterprise Inc., when asked if his team had talked with any Chinese firms.

“Florida has a lot of people that have fled communism,” Villamil said. “This goes way back for our state. So I just think we’re going to focus on our core competencies and countries that we have similar and shared values with.”

Florida Gov. Ron DeSantis, a likely 2024 Republican presidential candidate, has made China bashing a core part of his agenda in recent years. He just returned from leading a trade mission that bypassed both China and Taiwan in favor of Japan, South Korea, Israel and the U.K.

This month, DeSantis signed legislation barring residents of China and six other foreign countries of concern from owning agricultural land in the state. Some members of Congress have also proposed similar restrictions at the national level.

The issue has gained traction after Chinese food manufacturer Fufeng Group purchased 370 acres to build a wet corn milling plant in North Dakota, prompting the Grand Forks City Council to step in and block the development.

Only one of eight state delegations that POLITICO interviewed at the SelectUSA Investment Summit mentioned the possibility of their governor leading a trade mission to China in the coming year.

Gov. Kim Reynolds (R-Iowa) is considering plans for an overseas trip in the fall that could include stops in Japan and China, Kanan Kappelman, a spokesperson for the Iowa Economic Development Authority said. Both countries are top markets for Iowa’s agricultural exports.

Kappelman noted no final decision on the trip has been made. “Governor Reynolds definitely understands that Iowa is a global place to do business,” she said. “I think she’ll weigh her options when the time comes.”

In contrast, Montana’s Republican governor, Gregory Gianforte, is looking into trade missions in Taiwan and South Korea, said Frederick Van Den Abbeel, the state’s business attraction manager. That’s more in line with the recent pattern of bypassing Beijing.

Nicholas Burns, U.S. ambassador to China, commented on the dearth of overall U.S.-China contacts during a recent hot mike moment before being interviewed at a virtual event hosted by The Stimson Center, a security-oriented Washington think tank.

“We haven’t had a single executive branch visitor in three years, until two months ago,” Burns told his interviewer, while waiting for the event to begin. “Not a single member of Congress has visited in three years. Not their fault. It’s Covid. And then we haven’t had a CEO here in my first 12 months, until about six weeks ago. So we just haven’t had American visitors.”

The State Department’s press office declined to say whether they knew of any governor-led trade missions to China in the planning stage. They also refused to provide details on past trips.