In business, trade is a big word. Not in the sense of how you spell it, but rather how we use it, as there are many compartments to trading with different countries. From exports, to labor, to production and prices, trade isn’t just the exchanging of goods. Lets break it down and use the example of clothing.
“Chinese investment in the United States doubled in 2013, driven by large-scale acquisitions in food, energy and real estate,” write analysts Thilo Hanemann and Cassie Gao in “Chinese FDI in the U.S.: 2013 Recap and 2014 Outlook,” released on Jan. 7.
“We expect Chinese interest in U.S. assets to remain strong in 2014 because of aggressive economic reforms in China, a more liberal policy environment for Chinese outbound investors, and a positive outlook for the U.S. economy.”
Whereas state-owned companies have dominated in total deal value in the past, that is no longer true. In 2013, more than 70 percent of investment came from private enterprises, responsible for more than 80 percent of a total of 87 deals (of which 44 were acquisitions and another 38 were greenfield projects).
Where is the money going? Unconventional oil and gas was a top draw, with $3.2 billion invested in deals that include CNOOC’s (CEO) purchase of Calgary, Alberta-based Nexen Energy’s U.S. operations, Sinopec’s (SHI) joint venture withChesapeake Energy (CHK) of Oklahoma City, and a Sinochem International(600500:CH) stake in West Texas’s Wolfcamp Shale. Commercial real estate was also a big draw, with 18 investments in San Francisco, Los Angeles, New York, and Detroit totaling $1.8 billion. And the single biggest deal: Shuanghui’s (000895:CH)$7.1 billion takeover of pork processor Smithfield.
Chinese companies are also becoming big employers of Americans, says Rhodium, providing more than 70,000 full-time jobs as of the end of last year. That’s an eightfold increase since 2007. Huawei Technologies (002502:CH) and Lenovo(992:HK) are big employers, but just one company—Smithfield—accounted for 37,000 of the total workers at Chinese companies.
A separate report released in early December by private equity fund A Capital found that Chinese investors put $24.7 billion into mergers and acquisitions in all of North America in the just first three-quarters of last year.
A recent post on Steven Levitt and Stephen Dubner’s Freakonomics blog discussed the growth of the shadow economy across the world. The post claims that the shadow economy is the second largest in the world!
It is expected that over 10 trillion dollars circulate through the black market, which can be found anywhere from flea markets, roadside farm stands, swap meets and even the darkest allies around town. If governments around the World don’t do anything soon the black market might even become the world’s strongest economy soon!
Read more at http://www.omg-facts.com/category/8/Business/2#HjxB1IjKRoUJsmFz.99 (http://www.foreignpolicy.com/articles/2011/10/28/black_market_global_economy)
Image source: http://www.texaslending.com
China’s share of global economic power will hit 18% in the year 2030, matching the might of the American economy in the 1970s and Great Britain’s a century before that. That’s the forecast of Arvind Subramanian of the Peterson Institute for International Economics. In 2030, Subramanian predicts China will hold 18% of the world’s economy, the US 10.1% and India 6.3%. If those figures are right, then China is going to take over the US as the world’s economic superpower way before 2030 — not an inconceivable thought at the rate American politicians are pushing China to revalue the yuan while their own economy remains in the doldrums.
Via The Economist.