Later this year along the banks of the James River outside Richmond, Virginia, a paper products maker based in northeastern China will begin construction on a new U.S. manufacturing plant. The factory will churn the region’s straw and corn stalks into household products including napkins, tissue and organic fertilizer—all marked “Made in the USA.”
Shandong Tranlin Paper’s new U.S. factory is forecast to generate about 2,000 new jobs by 2020, and is the latest Chinese company to invest in American manufacturing.
Chinese foreign direct investment in the U.S. totaled $12 billion last year, topping $10 billion for the second year in a row, according to the Rhodium Group, which tracks Chinese money flows into the U.S. It was three years ago in 2012, when—for the first time ever—Chinese foreign investment in America lapped investment flows in the other direction to China.
Asian investment in America is nothing new. Japanese companies led the way in the 1980s, partly to evade tariffs. Avoiding international taxes on goods again is partly why Chinese businesses are coming to America. But Chinese investment in the U.S. is striking and different in other ways—and already altering pockets of domestic manufacturing.
Chinese investment in America largely has been tied to mergers and acquisitions. Chinese meat producer Shuanghui Group bought Smithfield Foods for roughly $4.72 billion. But some Chinese companies are taking another tack and building manufacturing plants—from the ground up—on U.S. soil. They’re spending hundreds of millions on new projects and expansions of existing U.S. subsidiaries combined have jumped to five to nine annually, from virtually none a few years ago, according to Rhodium’s research.