CHINA is becoming an unlikely source of jobs in some of US's struggling counties.
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CHINA Henan Province's Golden Dragon Precise Copper Tube Group, which opened a plant at Pine Hill in Alabama's Wilcox County in May, will employ more than 300 in a county not known for job opportunities. "Jobs that pay $US15 an hour are few and far between," says Dottie Gaston, an official in nearby Thomasville. What's happening in Pine Hill is starting to happen across America. After decades of siphoning jobs from the US, China is creating some. Chinese companies invested a record $US14 billion ($A15.15 billion) in the US in 2013, according to the Rhodium Group research firm. Collectively, they employ more than 70,000 Americans, up from virtually none a decade ago. Powerful forces - narrowing wage gaps, tumbling US energy prices, the vagaries of currency markets - are pulling Chinese companies across the Pacific. Mayors and economic development officials have lined up to welcome Chinese investors. Southern states, touting low labour and land costs, have been especially aggressive. In the case of the Pine Hill plant, tax breaks, some Southern hospitality and a tray of homemade banana pudding helped, too. "Get off the plane and the mayor is waiting for you," says Hong Kong billionaire Ronnie Chan. In March, Dothan, Alabama, held a two-day US-China manufacturing symposium, drawing dozens of potential Chinese investors. On sale were T-shirts reading: "Ni hao, y'all" - combining the Chinese version of "hello" with a colloquial Southernism. Chinese executives wandered around during a street festival, experiencing Americana by snapping photos of vintage '60s muscle cars. A Chinese company, in a deal negotiated before the symposium, announced it would bring a 3D printing operation to Dothan. Among other Chinese projects in the United States that are creating jobs: - In Moraine, Ohio, Chinese glassmaker Fuyao Glass Industry Group Co is taking over a plant that General Motors abandoned in 2008 and creating at least 800 jobs. The site puts Fuyao within four hours' drive of auto plants in Ohio, Kentucky and Indiana. - In Lancaster County, South Carolina, Chinese textile manufacturer Keer Group is investing $US218 million in a plant to make industrial yarn and will employ 500. South Carolina nudged the deal along with a $US4 million grant. - In Gregory, Texas, Tianjin Pipe is investing over $US1 billion in a factory that makes pipes for oil and gas drillers. The company expects to begin production in late 2014 or early in 2015. It will have 50 to 70 employees by the end of 2014 and 400 to 500 by the end of 2017. The United States and China have long maintained a lop-sided relationship: China makes things, America buys them. The US trade deficit in goods with China in 2013 hit a record $US318 billion. And for three decades, numerous US manufacturers have moved operations to China. The flow is at least starting to move the other way. One reason is that in the past decade, the cost of labour, adjusted for productivity gains, has surged 187 per cent at Chinese factories, compared with just 27 per cent in the United States, according to Boston Consulting Group. In addition, Chinese electricity costs rose 66 per cent, more than twice the United States' increase. The start of large-scale US shale gas production has helped contain US electricity costs. And the value of China's currency has risen more than 30 per cent against the US dollar over the past decade. The higher yen has raised the cost of Chinese goods sold abroad and, conversely, made US goods more affordable in China. Those rising costs have cut China's competitive edge. In 2004, manufacturing cost 14 per cent less in China than in the United States; that advantage has narrowed to five per cent. If the trend toward higher wages, energy costs and a higher currency continues, Boston Consulting predicts, US manufacturing will be less expensive than China's by 2018.
US manufacturing becoming cheaper then Chinese by 2018. Ouch.
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