China’s investment in US drops 83 per cent amid growing mistrust

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Updated: May 8, 2019 3:20:01 PM

Direct investments include things like putting up factories, not financial investments like buying stocks.

Chinese direct investment, United States, Rhodium Group, Beijing, Donald Trump, US, China, US direct investment in ChinaThe numbers fell partly because Beijing sought to rein in deeply indebted investors and partly because the U.S. regulators have stepped up scrutiny of Chinese investments. (Reuters)

Chinese direct investment in the United States dropped 83 per cent last year, pushed down by growing mistrust between the world’s two biggest economies. In a report out Wednesday, the Rhodium Group research firm said that China sank USD 5 billion last year into direct investments in America, down from USD 29 billion in 2017 and a record USD 46 billion in 2016.

Direct investments include things like putting up factories, not financial investments like buying stocks. The numbers fell partly because Beijing sought to rein in deeply indebted investors and partly because the U.S. regulators have stepped up scrutiny of Chinese investments. Rhodium estimates that China dropped deals worth USD 2.5 billion last year because they wouldn’t pass muster with the Committee on Foreign Investment in the United States, which reviews foreign investments with national security implications.

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Chinese investment in the U.S. information and communications technology industry plunged to USD 200 million last year from USD 2.5 billion in 2017. US direct investment in China, meanwhile, dipped to USD 13 billion from USD 14 billion in 2017. US investment in the Chinese information and technology industry dropped to USD 2.1 billion last year from USD 4.1 billion in 2017 and USD 4.3 billion in 2016.

US-China trade relations have deteriorated since President Donald Trump took office. The US and China have slapped tariffs on hundreds of billions of dollars of each other’s products in a dispute over Beijing’s aggressive drive to challenge American technological dominance. Congress last year passed a law making it harder for the Chinese to invest in U.S. companies and to buy cutting-edge technology. The U.S. is also putting restrictions on sensitive tech exports.

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