The world changed when President Richard Nixon closed the gold window and took the dollar off the Bretton Woods standard back in 1971 as it led to nearly a decade of recession, and a changeover in their long-standing positive trade deficit. And even with the short lived economic recovery in the 1980’s under Ronald Reagan, the die was cast for newer economic powers to one day usurp American industry.
When a nation borrows more than it takes in, and incurs ever growing trade deficits, it opens the door for creditor economies to begin buying out their declining businesses. And 30 years ago this was the case between the U.S. and Japan, where Japanese companies began buying up U.S. assets using the very same money Americans paid them for the right to import their goods.
It’s now pretty inconceivable that a Japanese company would be able to snap up American corporate assets as investments.
In the eighties, it was a fact of life.
Starting with a relative trickle at the beginning of the decade, Japanese conglomerates went on an epic buying spree in America during the latter half of the decade after both countries agreed to revalue their currencies.
The trend became so widespread that the “corporate Japanese takeover” concept began leaking into American culture. – Business Insider
Yet even as the Japanese economy began to wind down starting in the early 1990’s, a new concept arose in the West that would completely change the idea of business in America. That idea was ‘free trade and globalism’, and it would lead to the majority of American manufacturing not necessarily buying out foreign businesses, but instead utilize their labor by building new factories outside of their native countries.
This in turn would help economies like China to grow and surpass the United States in many ways, and enlarge the U.S.’s trade deficit to well over half a trillion dollars. And with these excess funds the wheel is once again coming back to its origin place of the 1980’s where this time it is China instead of Japan who is looking to take over many businesses and industries on American soil thanks to their status as our primary creditor.
China’s direct investment in the U.S. is expected to grow fast in 2017, but political realities pose major downside risk to it, according to a research report by a U.S. consulting firm.
Chinese companies invested a record of 45.6 billion U.S. dollars in the U.S. in 2016, tripling the amount in 2015, said the Rhodium Group in its recent report.
Although merger and acquisition remain the primary Chinese investment in U.S., greenfield investment is continuing fast expansion, the report said.
The rising Chinese investment to certain degree reflected China’s economic restructuring. “In contrast to the dominance of fossil fuel investments before 2013, more than 90 percentof Chinese FDI (foreign direct investment) in 2016 was targeting U.S. services andadvanced manufacturing sectors,” it said.
Real estate and hospitality, information and communications technology, entertainment, and financial services continued to attract the interest of Chinese investors.
The report expected Chinese investment in U.S. to continue experiencing growth in 2017, because Chinese companies are keen to upgrade technology and build out brands and localconsumer presence.
Other factors, such as stable U.S. economic outlook and the appreciation of U.S. dollar, also played a role in boosting Chinese investment. – En.People.CN
The only thing that will keep China from co-opting a great deal of American industry in the United States is the political and geo-political whims of U.S. politicians. Because even now China owns many strategic properties on the U.S. mainland such as ports, abandoned industrial parks, and even the former headquarters of J.P. Morgan Chase which is situated directly across from the New York office of the Federal Reserve.
The world changed the moment the United States reneged on the gold standard, and each year they lose more and more property and assets to those who are more financially acute as a result of their disconnecting from sound money. And their decline in economic power is not coming from any type of foreign conquest or a loss from a military battle, but from a combination of greed and destructive ideologies that will very soon lead the once great American empire to conscript the new label of Made From China.
Kenneth Schortgen Jr is a writer for The Daily Economist, Secretsofthefed.com, Roguemoney.net, and Viral Liberty, and hosts the popular youtube podcast on Mondays, Wednesdays and Fridays. Ken can also be heard Wednesday afternoons giving an weekly economic report on the Angel Clark radio show.