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Yanxi Liu

As the world’s balance of power shifts, there’s much indication that China has finally reached its position at the epicenter of international policy and economics that many had predicted for decades. Whether it’s President Xi Jinping’s ongoing ideological ambitions, the expansion of Chinese markets and the evolution of foreign investment strategies, or regional disputes in East Asia, China has assumed its role front and center as a guiding international force.

On February 13th, The Columbia World Affairs Council hosted a presentation detailing the future of U.S. economic foreign policy and our nation’s relationship with China, entitled “China and the United States: Cooperation beyond Competition.” The presenter, Yanxi Liu, Regional Economic Research Assistant, Division of Research, at the University of South Carolina’s Darla Moore School of Business and the U.S. Representative for Sanmenxia Sister Cities, outlined not only China’s economic and national policy and the pivotal role played by Sister City relationships, but she also provided those in attendance with greater insight into China’s overall economic approach to investment and trade with South Carolina.

For Yanxi, Columbia as a location and the Darla Moore School as an academic institution represent a global channel of influence for Chinese-U.S. relations and act as her personal brand that she will be promoting moving forward. The growing merge of the Midlands region with the Upstate has become “a bridge between China and the U.S.”

According to Yanxi, the held stereotypes of the Chinese market must be reconciled to understand why the U.S. and the state would establish a corporate partnership with China or promote Chinese tourism for that matter. Quite simply, China’s GDP annual growth rate of 6.8% has made a dramatic impact on South Carolina’s economy, creating 259 jobs and bringing $200M to the state with $69M coming into the University of South Carolina. In most cases, the tuition of a Chinese student studying in the U.S. is paid for by their family in cash, not through loans. This same direct cash stream used additionally for transportation costs and living expenses stimulates the U.S. economy with 45k jobs each year. Considering that these students generally enter into engineering and computer science departments, such an influx of Chinese academic influence on American universities has contributed example after example of innovative improvements to technology.

However, Chinese and other international students typically return after their semester(s) abroad, as many of them have difficulties finding jobs or internships upon completion of their education. If neither job nor internship are obtained within the three months after graduating or completing their education, an Optional Practical Training (OPT) status, allowing them to legally stay for another year, is deemed unavailable to the student. Even if an international student is granted the allotted twelve months of OPT status, the individual requires an H-1B visa that allows U.S. employers to employ foreign workers in specialty occupations. For many international students, such a series of obstacles encourages a return home to test respective job markets.

Apart from U.S. universities acting as a form of direct Chinese investment in the U.S. economy, if there’s one key takeaway from both President Xi’s speech at the 19th National Congress of the Communist Party of China (CPC) last fall and the World Economic Forum’s Annual Meeting at Davos in January, it’s that China’s investment in technology will be the primary focus from this point into the future. This represents a major shift in economic principle, reshapes the outsider’s impression of what the Chinese economy is capable of, and creates seemingly boundless social implications. Make no mistake, Chinese real estate investment is still the largest form of investment in the U.S. All in all, China being the second largest trade partner of the U.S. and the E.U. over the course of the past five years that Xi has been in office will be far from jeopardized.

Although, where the Chinese economy can really grow beyond anyone’s expectations is through the technology sector and tech consumer demand. Chinese companies no longer have to rely on price for market share, but simply the quality of the product. Huawei, China’s telecom market leader, is beginning to go head-to-head with Apple, incorporating hardware before Apple’s releases of iPhones. But Chinese smartphone makers aren’t the country’s true technology leaders; it’s their internet companies. As forecasted, the Chinese economy’s future will be largely reliant upon its internet companies that are bound by the Chinese government’s regulations, but must also cater to their customer base that expects innovative services. The “Great Firewall,” a system of online restrictions designed for mass censorship, has become the world’s largest non-tariff barrier that invariably protects the Chinese economy from U.S. competition.

The world’s largest retailer, Alibaba, is a mix of Amazon, Twitter, and PayPal that uses various forms of robotics and drones to deliver products. Social media and gaming giant, Tencent, has a market values that is greater than Facebook’s. Baidu, China’s version of Google, mimics Google’s investment in A.I. Internet giants and smartphone makers are now the peers of Silicon Valley rather than previously having been labelled as imitators. Even though the “Apple effect” may have provided the blueprint for this corporate tech surge in China and regardless of whether Apple leads by a considerable margin to these Chinese companies in terms of profit, Amazon, Facebook, and Google have either been met with innovative competition or have been surpassed. The restrictive nature of the Chinese market has made these companies larger, more profitable, and more advanced, which directly impacts how much China invests overseas, and more applicably, in the South Carolina.

According to the South Carolina Research Authority (SCRA), there are growing expectations that Chinese investment within the state and the Chinese market’s availability to South Carolina will continue to expand. In terms of the Chinese businesses and corporations investing in South Carolina, Chinese automotive, consumer electronics, and advanced materials mainstays have flocked to the Palmetto state. Volvo Car USA projects the employment of 2k people over the next decade at its new factory in Berkeley County, South Carolina. More notably, the parent company of Volvo Cars, Geely, is a Chinese multinational automotive manufacturing company. Chinese consumer electronics and home appliances company, Haier, established manufacturing operations in Kershaw County, South Carolina in 1999. Haier has recently expanded these operations in Camden with a $72M expansion that will add more the 400 jobs over the next five years. Sun Fiber LLC, with manufacturing and production operations in Rock Hill, South Carolina, is a wholly owned subsidiary of the Chinese company, Cixi Jiangnan Chemical Fiber Co., LTD based out of Zhejiang. Of the fifteen to twenty Chinese companies in South Carolina, some are manufacturing providers for a very unlikely, yet famous foreign investment cornerstone within the state: BMW.

Despite the Trump administration’s unpredictable, even isolationist, economic, and political relationship with China, one must appreciate China for exactly what it is and, now more than ever, what it more broadly represents. Ultimately, China’s social and economic impact on South Carolina and the state’s capital has spurred a statewide and citywide boom all its own.

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