Tomorrow, China's vice president, Xi Jinping, is visiting the White House. By all accounts, Mr. Xi is set to succeed current president Hu Jintao in the winter, and news of his visit with President Obama has stoked the ire of critics of China's trade policies.
The Chinese government has been accused of a wide range of commercial abuses, including unfair subsidies for private industry, currency manipulation, and illegal restrictions on exports of raw materials used by foreign manufacturers.
While the U.S. government can and should hold the Chinese accountable for violations of international trade agreements, that strategy should be coupled with an expansion of the mutually beneficial economic engagements already in place between the two countries. Indeed, America needs to make a concerted effort to fruitfully engage with the entire set of top-flight emerging markets, of which China is a part -- the so-called "BRIC" countries.
Developing a more positive relationship with all of the BRIC nations -- Brazil, Russia, India and China -- could help shake off the still lingering recession. And more specifically, policies encouraging more foreign direct investment from companies in BRIC countries would help put a dent in America's stubborn unemployment.
As of now, these firms represent a small slice of the total foreign investment in the United States. According to a 2011 report issued by the President's Council of Economic Advisers, 90 percent of global investment in the United States comes from Europe, Canada and Japan. With only 2.1 percent of the total from firms domiciled in Brazil (1.2 percent), China (0.6 percent), and India (0.4 percent). BRIC companies are an untapped resource that could be a welcome source of new jobs.
To be sure, foreign investment from the BRICs can create unique economic and political challenges for the United States. Indian-based firms, for instance, have been a target for the American jobs that have been "outsourced" to that country. The strong role the Chinese government plays in its industry raises legitimate concerns about fair competition.
However, given the significant benefits the American economy can potentially reap from BRIC companies, U.S. policymakers should seek to avoid a narrowly focused confrontation.
Once among the world's poorest economies, the BRICs are now potential powerhouses -- home to roughly 40 percent of the global population and more than$10.5 trillion in combined economic output, or about one-sixth of total global economic activity. Even as the rest of the world has remained mired in recession, the BRICs are flush with cash. Goldman Sachs predicts that 1 in 3 dollars of global output will flow from the BRICs by 2020.
Although still comparatively modest, BRIC companies have more than doubled their investment in the United States since 2005 -- totaling roughly $5 billion in 2010. In 2011, according to the Financial Times fDi Markets database, BRIC companies created 13,072 new jobs in America through so-called "greenfield" investments alone -- ground-up construction of new facilities or plants.
And as concrete evidence of even greater benefits going forward, BRIC businesses are already creating jobs in America. For instance, workers at the American subsidiaries of the Indian-owned Tata Group now manufacture steel in Ohio and Pennsylvania; process Tetley brand tea in Florida and Georgia; and make "Eight O'Clock" brand coffee at facilities in Maryland. All told, Tata's 17 North American subsidiaries employ about 20,000 people in the United States and Canada.
Or consider Sany America, a U.S. subsidiary of the Chinese-owned concrete and machinery manufacturer. The company is investing approximately $25 million to build a new research and development center alongside its corporate headquarters in Peachtree City, Georgia. This is on top of $60 million Sany has already invested at the site, which currently employs 100 people and is expected to generate 300 new jobs by the end of this year.
The U.S. subsidiary of Brazil's JBS, the largest animal protein processor in the world, currently employs over 60,000 workers in the United States. One of the company's chicken brands, Pilgrim's, employs over 40,000 people across fourteen states, including Texas, Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, North Carolina, South Carolina, Tennessee, Virginia, West Virginia, Arizona and Utah, and exports to over 95 countries.
These are just a few examples of how investment from BRIC companies is directly boosting the American workforce. But they are a potent reminder of the possibilities.
Although next week's visit from China's vice president will bring concerns about that country's trade policies to the surface, our response should be driven by thoughtful consideration of our long-term national interests and constructive engagement.
America can hold China -- or any other BRIC nation -- accountable for trade violations while also recognizing the vast opportunities emerging markets hold for our economy and workers.
If the United States acts smartly, BRICs could provide crucial building blocks to recovery.
The Morning Email helps you start your workday with everything you need to know: breaking news, entertainment and a dash of fun. Learn more