Chinese investment in US drops to lowest level since 2009

PTI, May 11, 2020, 11:29 AM IST

Washington China’s direct investment in the United States fell last year to its lowest level since the Great Recession, even before the coronavirus pandemic shut down much of global commerce.

The decline in Beijing’s investment in the United States reflected tensions between the world’s two biggest economies and Chinese government restrictions on overseas investment.

A report out Monday, May 11 from the National Committee on US-China Relations and the Rhodium Group consultancy found that China’s direct investment in the US dropped from USD 5.4 billion in 2018 to USD 5 billion last year, the lowest level since the recession year of 2009.

The direct investment includes mergers, acquisitions, and investments in things like offices and factories but not financial investments like purchases of stocks and bonds.

The report found that Chinese direct investment in the United States virtually vanished to USD 200 million from January-March this year as the coronavirus pandemic hammered the world economy US investment in China ticked up last year to USD 14 billion from USD 13 billion in 2018.

But that increase largely reflected previously announced projects, including Tesla’s factory in Shanghai.

“Two-way investment between the United States and China fell to a seven-year low,” the report found.

US regulators, worried that China will gain access to sensitive American technology, have been taking a harder look at Chinese investment in the United States, a shift mandated by a 2018 law.

The two countries have also sparred over the US charges that China uses abusive tactics, including forcing foreign companies to hand over trade secrets and outright cyber-theft, in its effort to surpass American technological dominance.

President Donald Trump has imposed tariffs on about USD 360 billion worth of Chinese goods.

The Trump administration and Beijing reached an interim trade agreement in January intended to ease the tension. But the pact was quickly overtaken by the pandemic.