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BEIJING: Chinese direct investment in the United States fell to the lowest level since 2009 last year amid bilateral tensions, and the COVID-19 pandemic will continue to affect investment flows between the world’s two largest economies, according to a report.
By hampering deals and achieving economic growth, the pandemic could dissolve the positive effects of the Phase 1 trade deal signed in January, according to the report by research firm Rhodium Group and the National Committee on Relations between the United States and China.
Initial data indicates a “significant decline” in Chinese investment in the United States in the early months of 2020, the report said, with $ 200 million in recently announced direct investments compared to $ 2 billion on average per quarter for the year. past.
But US companies announced new $ 2.3 billion direct investment projects in China in the first quarter, only slightly below last year’s quarterly average, according to the report. American companies do not appear to be considering significantly reducing their footprint in China, the report says.
By exposing fragile global supply chains, the pandemic could push American companies to move manufacturing out of China, but it could also spur more investment as companies try to locate their operations, he said.
United States investment in China grew slightly in 2019 to $ 14 billion, with an overall two-way flow that stabilized after big declines in the previous two years. According to the report, Chinese investment in the US USA It fell to $ 5 billion that year from $ 5.4 billion the year before.
Venture capital flows fell sharply in both directions amid heightened regulatory scrutiny from the United States and investor concerns that China’s tech market was overheating, according to the report.
The pandemic could have been an opportunity for the United States and China to work together, the report said, but “intensifying economic competition and a systemic battle of political systems continue to weigh on the relationship as governments participate in games of guilt”.
China’s investment in the US USA It peaked in 2016 amid an avalanche of ambitious deals abroad. Since then, regulators have tightened controls on what they described as “irrational” investments abroad.
“Our two countries are still far from decoupled, but the trend lines are not pointing in the right direction,” Stephen Orlins, chairman of the National Committee on Relations between the United States and China, said in a statement accompanying the report.
The US presidential campaign. USA It could also increase the risks of a backlash against Chinese investment, the report said, including to acquisitions outside the scrutiny of the Committee on Foreign Investment in the United States (CFIUS), which has increasingly flexed its strength against Chinese companies. – Reuters
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