US State Governments Look to China for Funds

An official adjusts Chinese and US flags during the US-China Strategic and Economic Dialogue, held July 27, 2009 in Washington, DC. (Jewel Samad/AFP/Getty Images)

China's investments in the US shot up a whopping 360 percent in the first half of this year compared to 2009, reports Asia Society Fellow Sheridan Prasso for Fortune. US state governments, particularly states hit hardest by the recession, are eager to get their hands on this Chinese money in order to build factories and create jobs. However, not everyone is so thrilled at the prospect of Chinese investors having such a high stake in the US market.

When China's fourth largest steel producer, Angang Steel Co. expressed the desire to buy a mere 20 percent stake in the Mississippi-based, Steel Development Co., the company called an investigation into whether or not this Chinese investment would present a threat to national security—a move Chinese representatives call thinly-veiled protectionism.

"Most U.S. politicians hope China can invest in the U.S. to create jobs, and the move by a small group of politicians to investigate and review the deal in the name of 'national security' is inappropriate," said Yao Jian, a spokesman for the Chinese Ministry of Commerce in a news conference on Tuesday. Yao Jian also warned that this sort of protectionism would only discourage Chinese investors from pumping more money into American companies, a consequence it looks like many Americans can't afford.