Chinese investment in United States will not recover

Subject

Chinese investment in the United States.

Significance

Chinese investment in the United States has suffered a double blow from deteriorating US-China relations and restrictions put in place by China’s own government. Foreign direct investment (FDI) flows increased rapidly until 2016, making China an important source of FDI for the United States. Since then they have sharply declined.

Impacts

• Chinese companies will look more actively for investment opportunities in other developed countries, especially in Europe.
• Washington is likely to press its allies to restrict FDI from China and to coordinate policies, citing security concerns.
• US businesses will be negatively affected by a weaker inflow of ‘China money’.
• US firms will find it harder to establish links with China, which may cause them to miss business opportunities there.
• China’s government will provide support for Chinese firms to acquire US high-tech firms.