Strategic competition with China will negatively impact US pension system

The US should not start strategic competition with China, an industry insider has said. He explained that the national financial distribution of the US will be affected by transferring resources for improving people’s lives to national defense.

Stephen Orlins, president of the National Committee on U.S.-China Relations (NCUSCR), said strategic competition with China will hurt the long-term interests of the US. While funding a strategic plan, the country will have to cut down on resources otherwise allocated to key sectors such as innovation, education and infrastructure.

According to a report released together by the NCUSCR and the Rhodium Group last week, two-way investment between China and the US fell by $43 billion in 2017, a drop of 28 percent from the previous year.

The report said this drop was due to China’s outbound investment regulation and the US’s tightened scrutiny of Chinese investment due to “national security” that has restricted businesses of Chinese companies, Xinhua stated.

Daniel Rosen, a founding partner of Rhodium Group, said on Tuesday that perhaps the China-US frictions are unavoidable in the days to come. However, he added that the two countries are actually in a complementary relationship in the economy. He believes economy will continue to be a ballast stone that serves welfare of the two nations.

Orlins said despite the drop in two-way investment, the rapid development of China-US investment is still impressive. He pointed out that when he first came to Shanghai 40 years ago, it never occurred to him that such enormous investment could be exchanged between the two countries 40 years later.

If the US rejects a Chinese enterprise which has won the bid for a public project and lets other bidders win with a lower price, that will devalue US pension funds used to support the public project. Eventually, this will reduce the pensions distributed to retired US teachers, firemen and police, he pointed out.

The US has been competing with China for years, just like it has been doing with the UK, France, Canada and Mexico. Although this is of course normal, the competition should not be lifted to a strategic level as it will hurt both countries, Orlins explained.