Close Up: Chinese Investments in America

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What is Know the Numbers?

This heat map product provides a detailed, close up view of what Chinese investments actually mean to workers and communities across the United States.

Based on an underlying data set, the product gives a current snapshot of every single entity in the United States that is majority owned by Chinese companies or investors. The heat map also includes measures of these investments’ impact on local employment and indicators of their contribution to local economic growth.

Know the Numbers is highly interactive: it allows users to view the distribution of Chinese investments in America at three levels: national, state, and county. This feature is meant to be useful to both local and national policymakers, businesses, and potential investors, as well as all users who seek a more granular understanding of the totality of Chinese investments in America.

Rather than relying on headline deal flow and announcements, this product instead constructs a bottom-up picture of Chinese investments in terms of their tangible effects on workers and local communities. For example, users can easily compare one US jurisdiction to another in terms of attracting Chinese investments, as well as compare those investments’ local economic impact across diverse American geographies.

How is Know the Numbers Different?

This product has several attributes that distinguish it from existing offerings on Chinese investment: First, it offers a high level of granularity, one that is currently not publicly available. Second, it represents a detailed bottom-up picture of the current reality of Chinese investments rather than aspirational investments based on press releases or deal announcements. Third, the product uses a proprietary data set that has been updated daily in order to capture an accurate picture of the state of Chinese investments in America today (see more below on data and methodology).

Foreign direct investments are very difficult to execute under any circumstance. This is even more so when investments involve a Chinese entity that lacks familiarity with the business and cultural dynamics of the local environment into which it aims to invest. Many deals begin with major announcements or groundbreaking ceremonies but then ultimately fail and provide no added value. In some cases, greenfield investments, such as Tianjin Pipe‘s investment in Gregory, Texas, take a long time to complete and are not considered existing establishments generating economic output in the dataset. Therefore, it is important that this product, to the best of our knowledge, offers a snapshot of all existing Chinese investments as of 2017, with each entity represented in the heat map employing real people and generating real economic output.

How It Works

The product is built on a Google Map platform. While the functionality should be familiar to most users, here are additional pointers to help users navigate the product:

• Clicking on a single state will display all counties that have Chinese-owned entities and corresponding key state-level data in the right menu (the states of Alaska and Hawaii and the District of Columbia can be viewed by clicking on the buttons in the upper left corner when you are in the default view of the entire United States);
• Clicking on a county will display a series of green dots that represent individual Chinese investments and corresponding county-level key data in the right menu;
• Clicking on a single dot allows you to zoom into “street view” to see the actual location of the establishment;
• To view another state, click the “zoom out” button in the upper left corner.

The product is best viewed on desktop and laptop, because it has been optimized for those screen sizes. While the product is functional on mobile, it will continue to be improved and optimized over time.

Some of the Great Lakes states’ borders may appear slightly different than on a conventional map. That’s because this map is built by adhering to official county borders, some of which actually extend into the Great Lakes for those states.

We also want to note that for certain counties where there is a very high concentration of Chinese-owned entities (e.g. Los Angeles County), it may be difficult to click on every single dot because they are very closely congregated. In designing the product, we had to balance the ability to capture all entities within a county with showing every single distinct entity clearly. Unfortunately, that was not always possible to achieve, so a very small number of counties will have less distinguishable dots due to the high concentration of investments.

Note on Terms 

The following terms are used in the product:

• Chinese Direct Investment = the total number of entities in which Chinese companies or investors have a majority stake (>50%).
• Total Employment = the total number of people who are employed within Chinese-owned entities.
• Contribution to Economy* = total sales value by Chinese-owned entities and as a percentage of respective national and state GDP.
• Top Chinese Investments = determined based on total employment in Chinese-owned entities (we show the top 12 at the national level).
• Ranking of Counties and States = determined by the total number of Chinese-owned entities in a particular jurisdiction and by total number of employees within Chinese-owned entities.

* Sales value, or gross output, reflects double counting as it includes both the sale of intermediate and final products, while GDP is a non-duplicative measurement. Therefore, sales value as a percentage of GDP is a decent, if imperfect, proxy measurement of economic contribution. Also, official GDP data at the county level are not available, according to the Bureau of Economic Analysis.

Data and Methodology

The underlying data used in “Know the Numbers” is called the National Establishment Time-Series (NETS). It is a time-series database of establishment information created by a commercial data provider, Dun & Bradstreet (D&B). For almost 30 years, D&B has taken regular snapshots of the US economy at the firm level by collecting information such as job creation and destruction, sales, change in primary markets, and corporate affiliation, among other data. According to D&B, the collection of data is largely based on compilation of regulatory records, filings, and telephonic surveys. The company conducts over 100 million calls per year to verify and update its database. The set of NETS used in Know the Numbers is up to date as of June 2017.

With the NETS data as our foundation, the MacroPolo team engaged in an intense data cleaning and re-coding process. During this process, we identified, verified, and at times corrected the base data. This process required collecting and leveraging information from a wide array of sources that includes, but is not limited to, regulatory filings, corporate information, media coverage, Bureau of Economic Analysis, US Census Bureau, and occasionally even satellite imagery.

After completing our data cleaning, we streamlined all divisions, subsidiaries, and business segments and units, among other categories, in order to determine a given corporate establishment’s most commonly known name. We also identified the establishment’s location down to the levels of street address, county, and state by cross checking against US postal service records.

For employment figures, we kept the data that had been coded with the highest level of confidence (0) by D&B, and then re-estimated a portion of the data that had been coded with lower confidence levels (1, 2). We re-estimated these less confident figures based on a combination of the following: examining the industry in which the respective establishment falls and its sales value and then adjusting slightly based on the industry average. For sales value figures, we undertook a similar process and re-estimated some of the data based on “revenue per employee” across industries.

Throughout our data verification process, we took a conservative approach to maintain baseline data accuracy and worked to avoid inflating the figures to the extent possible. Of course, some deviation from the economy in real time is inevitable as this set of data is very granular and the American economy is dynamic and constantly changing. The base data cannot be entirely free of error either since it is partly compiled from millions of human responses and interactions, introducing some human error. Beyond these necessary caveats on data integrity, the final data set we rely on for Know the Numbers is, to the best of our efforts and knowledge, an accurate representation of total Chinese investments in the United States as of 2017.

We hope to receive feedback from users on this product. Because this data is highly specific in terms of entity and location, users living in local communities are well suited to “double check” the accuracy of elements in the product. A user may well live on the same block as a Chinese-owned establishment featured in Know the Numbers, so we strongly encourage the user to treat this products as a team effort between MacroPolo and you, collaborating to achieve the best possible and detailed representation of Chinese investment in America and its effects.

To provide feedback, please reach out to our product manager Joy Ma (jma@paulsoninstitute.org) and share your local knowledge. This feedback loop will be important as we work to improve the product and make it as useful and accurate as possible for those interested in understanding the extent and scope of Chinese investments across the United States.