Do Chinese Factories Change American Minds?
New research shows new investment reduces threat perceptions while acquisitions don't
Conventional wisdom about American attitudes toward China rests on the belief that as China’s economic power grows, Americans will increasingly view Beijing as a threat. Figures on both sides of the aisle leverage this perception, framing China’s rise as an existential challenge to American prosperity and global standing. But the reality arriving in American communities tells a more complicated story. In June 2024, Chinese battery manufacturer EVE Energy broke ground on a joint venture factory in Mississippi that promises more than 2,000 jobs and represents a $2-3 billion investment in electric truck battery production. Mississippi’s Republican Governor, and strong China critic, Tate Reeves, celebrated the project as “the largest payroll commitment in state history”. Meanwhile, a plan to build a $2.4 billion Gotion battery plant in Michigan collapsed earlier in October after years of intense local opposition to the company’s ties to China. The Michigan project also faced pushback from national Republicans over security concerns due to the plant’s proximity to Camp Grayling, the nation’s largest National Guard training facility.
These anecdotes demonstrate an increasingly important question: Does a Chinese presence in local economies heighten American’s sense of threat, or improve perceptions of the country? The answer, it turns out, depends significantly on what form that presence takes and how communities experience it.
In a newly released paper, Aycan Katitas (Carnegie Mellon University) examines this very question. Katitas identifies a specific pattern in how Americans respond to Chinese greenfield investment, which is when a foreign company builds new facilities and operations from scratch in a host country, creating new physical infrastructure and employment rather than just acquiring existing businesses.
Katitas finds that when Chinese companies announce greenfield FDI projects, Americans in those congressional districts become measurably less likely to view China as a threat. The effect works through economic sociotropism, meaning people’s beliefs about collective economic conditions rather than their personal finances. When Chinese investment creates visible local jobs and economic activity, it changes how residents think about China’s economic role. Local news coverage frames these announcements around job numbers and growth projections. Communities receive information about opportunity rather than economic risk.
Katitas also finds, though, that Chinese mergers and acquisitions produce no similar reduction in threat perceptions. When Chinese firms acquire existing American companies, the employment consequences remain ambiguous. Acquisitions may preserve existing jobs, but they could also lead to restructuring, consolidation, or layoffs. The transaction doesn’t create new visible economic activity in the same way a factory groundbreaking does. Local media coverage promotes this uncertainty via framing acquisitions as transactions with unclear implications rather than as sources of community benefit. Without the clear signal of job creation that greenfield investment provides, these acquisitions fail to generate the positive sociotropic perceptions that reduce threat attitudes. The contrast between the two types of investment suggests that visible economic benefits take precedence over the nation of origin for capital investment.
Katitas finds that each unit increase in logged jobs from Chinese greenfield projects reduces the probability of viewing China as a threat by one percentage point. Across the observed range of investment, this translates to a ten-percentage point decrease in threat perceptions between companies that brought in the fewest job and companies that brought in the most. That’s roughly half the size of the partisan gap between strong Democrats and strong Republicans on China threat perceptions. For investments covered by local newspapers, the effect doubles compared to unreported projects. This confirms that information transmission drives people’s perceptions of Chinese investment. People respond to what they know, and local media serves as the primary channel through which communities learn about Chinese investment.
The effect has clear boundaries, though, as national attachment matters significantly. Highly nationalistic respondents prove resistant to the positive effect of Chinese investment. For these Americans with strong attachment to national identity, exposure to Chinese greenfield FDI does reduce threat perceptions, but the effect is less than half as strong as for those with weaker national attachments. Out-group prejudice and nationalist sentiment create cognitive barriers that economic information alone cannot overcome. The jobs are real and the economic benefits are tangible, but for some portion of the population, identity-based threat perceptions override economic considerations.
The findings suggest that Chinese integration in the US economy produces more nuanced effects than the simplified narratives common it today’s media. Economic engagement with China operates through multiple distinct channels that generate divergent psychological responses. Trade competition creates job losses that fuel resentment toward China, but greenfield investment creates employment that reduces threat perceptions. Threat perceptions depend on investment visibility and information transmission through local media rather than on personal economic circumstances.