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1: A long thread from me on US-China relations and local realities. This terrific and timely @nytimes article on Chinese investment in the US captures something crucial. For years, trade was contentious, investment less so. But that has changed utterly. nyti.ms/2JHLpar
2: Trade was contentious because it fueled an intuitive sense among some Americans that US-China interaction had become unbalanced. You can hear this in much of President Trump's rhetoric about unfair trade at his rallies. He also deployed it to effect in his run for President.
3: But investment *used* to be less contentious because it could mean jobs in the US, not China, jobs for Americans, not for Chinese. Put bluntly, it appeared to be a vote of confidence in America and in the US economy. Invest here, some said, and you "pay America a compliment."
4: What this @nytimes article highlights is not just collateral damage from the trade war. The flow of Chinese investment has fallen because of constraints on both sides: heightened US national security and competitiveness concerns, Chinese capital controls and other factors. 
5: But it strikes me that three things may be missing from this treatment that we’re trying to better understand at @CarnegieEndow through an effort to connect local developments to global trends across Asia. We call this effort #AsiaLocalGlobal.
6: And by the way, our effort isn’t at all just about China and America. We have amazing sub-national work going on across our Asia programs and across our global platform of centers around the world. But in the US-China context, I think it highlights the following three things:
7: The first is the way that global stakeholders, including in this case some Chinese firms, have become more anchored to local communities. Let's take one Chinese company to illustrate: Wanxiang started down a pathway into America by getting into the Midwest auto parts business.
8: In May, I interviewed Pin Ni, the firm's US founder, about this. His firm was at first a bit like a private equity player, buying small-scale distressed assets but then integrating a US-based plant into a global model. That anchored the firm locally and the plants globally.
9: And in the bargain, he said this changed the corporate culture for a “Chinese” firm to something that was adapted to American realities. Chinese firms that came later struggled but some learned how to do that.
10: Here's a second issue: whether that gives a company more touch points in America. For instance, he argues that his firm, as it became more anchored in the US as an American firm, worked jointly with the UAW. Other Chinese firms say this too but only those that engage locally.
11: So if a Chinese or other foreign firm (1) becomes anchored in a local US community and (2) develops more touch points locally with a diverse group of Americans, it’s playing a different and longer game than can be captured by this or that month’s investment flow statistics.
12: That will be interesting to watch politically. After years in the Midwest, I joined @CarnegieEndow in January. There’s a deep reassessment of relations with China underway in Washington. And it spans the political spectrum from left to right. But outside DC, it's complicated.
13: I described this to my colleague @jrpsaki in a @CarnegieEndow podcast we recorded shortly after I arrived here. Americans touch China in surprisingly diverse ways, including, as these sample #AsiaLocalGlobal discussions show, at the community level. bit.ly/2YcGFhc
14: So foreign policy/national security professionals (like me) have become skeptical of China and tend to emphasize strategic competition. And Wall Street and US corporates look askance because China isn't as open as they had hoped a staggering 18 years after WTO accession.
15: But where old stakeholders have turned confrontational, some new constituencies anchored outside Washington have emerged: agribusiness, midcaps, tech startups, and governors/mayors. Many of the latter still chase Chinese investment as if current hostilities aren't happening.
16: A few months ago, one of the top advisors to a Republican governor described it to me this way: "Our message to Chinese investors," he said, "is that we are open for business regardless of federal policy." That's quite a disconnect.
17: And I recently bumped into the agricultural trade representative of another state on a flight to Washington -- a state with a Republican governor who prominently supports President Trump. He told me about a ramped up effort, backed by the governor, to do more with China.
18: That’s surprising ... until you listen to folks like Pin Ni in my #AsiaLocalGlobal discussion with him talk about how “the governor knows your name, knows your birthday." In that recorded discussion, he described how Chinese firms get mixed messages from diverse Americans.
19: So here's what I wonder: how this plays out if President Trump strikes a “skinny” trade deal that leaves structural disputes in place, e.g., around technology, but gives him enough to hold rallies from Michigan to Missouri about his “biggest, hugest, and best deal ever."
20: At that point, political base effects and these local touch points could kick in, with some rather interesting political effects.
21: US-China relations are headed in a confrontational direction, not just in the US but in China too. I had a lot to say about US policy and strategy in this essay on China’s highly strategic brand of revisionism and how America can and should respond. carnegieendowment.org/2018/04/27/rel…
22: But here's another punchline: these local effects are not captured well in political debates. One way to understand what’s happening between countries is through government negotiations and aggregate national trade and investment figures. But ...
23 ... at the end of the day, it’s the companies and people—usually far away from national capitals—that do the work. And in a changing world, what’s “local” and what’s “global” often blur together. The more anchored things are locally, the more complicated they are politically.
