Chinese Investment in the US Declining - Global Trade Magazine
  May 10th, 2018 | Written by

Chinese Investment in the US Declining

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  • The Chinese invested $29 billion last year, a 35 percent drop from 2016.
  • It would not be entirely fair to blame Trump for the falloff in Chinese investments in the US.
  • Chinese regulators have put the kibosh on outbound investments to counter large-scale capital outflows.
  • The Trump administration is taking a less positive of view of Chinese investment than its predecessors.

A study from the Rhodium Group and the National Committee on US-China Relations on Chinese investment in the United States reports a significant drop in Chinese investment in the US. The Chinese invested $29 billion last year, a 35 percent drop from 2016, which was a record year.

Investments that originated and closed in 2017 and exclude those that began in 2016, the value dropped by 90 percent.

This significant dropoff might be laid at the feet of the Trump administration but it turns out that would not be entirely fair. Chinese regulators have increased scrutiny of outbound investments in an attempt to counter large-scale capital outflows to the world at large, not just the United States. It’s been a major policy of China’s central bank to resist any capital flight that investors may be tempted to undertake.

It’s true also that the Trump administration is taking a less positive of view of Chinese investment than its predecessors. Congress has legislation pending that would significantly expand the number of investments reviewed by the government.

Rumors have it that the administration may attempt to preempt Congress by implementing some changes without waiting for the legislation to make its way through the House and Senate. While it may appear that this is another skirmish in a US-China trade war, the facts indicate that the falloff in investments started before Trump took office and was initiated by China. After decades of increasing economic integration, both sides appear to be on a course of disentanglement.


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