See More on Facebook

Business, Diplomacy

Chinese FDI in US plunges as obstacles rise

Trade war has far reaching ramifications on investment.


Written by

Updated: January 18, 2019

Chinese foreign direct investment (FDI) in the United States plummeted more than 80 percent in 2018, and the downturn is expected to continue, given tighter US regulatory screening and policy shifts in China, analysts have said.

After declining from a peak of $48 billion in 2016 to $31 billion in 2017, Chinese FDI in North America dropped to $8 billion in 2018, and total investment in Europe was also down, according to the latest analysis from law firm Baker McKenzie.

The US was responsible for the majority of this, falling from a peak of $45.63 billion in 2016 and $29 billion in 2017 to just $5 billion in 2018, down 83 percent, said the report released on Monday.

“The FDI flows are declining for both Europe and America, and the decline is because Europe and America are getting more restrictive, particularly in technology areas, so that’s having a negative effect,” Yukon Huang, former World Bank China director, said on Tuesday.

Huang, a senior fellow at the Carnegie Endowment for International Peace, said the Committee on Foreign Investment in the United States (CFIUS), a federal panel that determines whether deals with foreign corporations raise antitrust or national security issues, is a particular cause of Chinese concern.

While a 2015 committee report to Congress ranked China tops in terms of CFIUS reviews — even though the country ranked 14th in FDI to the US — Huang said the US has tightened the review process which will subject more Chinese investments to review.

But technology investment represents a small share of China’s investment in the US, according to “The Facts and China’s Position on China-US Trade Friction”, a white paper released by China’s Ministry of Commerce in September. From 2005 to 2017, of 232 direct investments from China, only 17 involved high-technology, while others were mainly in real estate, finance, and services, said the report, citing figures from the American Enterprise Institute.

“Historically, they have been welcoming, they want the jobs, they want Chinese companies to be moving to America,” Huang told China Daily.

“But I think there’s still a question of — under the political environment today — how willing are localities to encourage this, and I would say that generally speaking, probably, but nevertheless, if Washington is so hostile, then many Chinese companies will have reservations,” Huang said.

He said year-to-year FDI flows can fluctuate widely, and he tends to look at changes over five- to 10-year periods. He said that China’s outbound investment in property-related investments is also declining because firms and households are being discouraged from investing in property overseas.

China also has added restrictions to prevent irrational growth in outbound investment in recent months. No new projects were reported in sectors such as property development, sports, and entertainment in the first seven months of 2018, according to the Ministry of Commerce.

The Baker McKenzie report also said a divestiture spike in 2018 turned net FDI flows to the US “negative”.

A handful of prominent investors driving much of the 2015-16 FDI boom have begun selling holdings. The wave of divestitures is mostly hitting the US and consists mainly of real estate, hospitality, and entertainment assets.

“Accounting for the completed divestitures, net Chinese FDI inflows to North America were negative to the tune of $5.5 billion in 2018,” it said.

Huang said that foreign investment is shaped not only by strategic issues but also by commercial decisions.

“It should be, because households and firms, many of them are not interested in strategic issues, just trying to maximize their returns,” he said.

Douglas H. Paal, vice-president of the Asia Program at the Carnegie Endowment for International Peace, said he believed China’s currency outflow-control efforts had partly reduced the heavy flow of outbound investment.

“Moreover, the US has strengthened its supervision of technology-related investments, reducing the willingness of Chinese investors to risk undergoing the review process,” Paal said.



Enjoyed this story? Share it.


China Daily
About the Author: China Daily covers domestic and world news through nine print editions and digital media worldwide.

Eastern Briefings

All you need to know about Asia


Our Eastern Briefings Newsletter presents curated stories from 22 Asian newspapers from South, Southeast and Northeast Asia.

Sign up and stay updated with the latest news.



By providing us with your email address, you agree to our Privacy Policy and Terms of Service.

View Today's Newsletter Here

Business, Diplomacy

Indonesia slams Singapore for withholding information on nationals treated for COVID-19

Indonesia complains on Singapore insisting to withhold personal information of its citizens showing COVID-19 symptoms in Jakarta. The Indonesian government has complained that Singapore insists on withholding the personal information of several Indonesian citizens believed to have shown COVID-19 symptoms in Jakarta and tested positive for the lethal virus in the city-state. Jakarta said it was facing difficulties in tracing and isolating those who might have had contact with the patients, now being treated at Singaporean hospitals. “We have asked for the identities of the Indonesian nationals from Singapore. They did not give us the names. How are we going to conduct the tracing in Indonesia? Singapore is adamant on not disclosing their identities,”


By The Jakarta Post
March 13, 2020

Business, Diplomacy

Seoul stocks sink, trigger first circuit breaker for 5 min in 8 years 

The Kospi plummeted more than 5 per cent during Thursday trading, which triggered the stock exchange to temporarily halt trading on Korea’s main bourse, as investor sentiments weighed on the coronavirus pandemic. The Korea Exchange activated a “sidecar,” meaning it temporarily halted the trading of shares, for five minutes around 1:04 p.m. after Kospi 200 index futures slipped over 5 percent. It was the first time the sidecar had been activated for the Kospi since Oct. 4, 2011, when Greece defaulted on its debts. “The temporarily halt trading was due to the plunging of the Kospi 200 index futures. They plummeted from 256.90 points to 243.90 points — down 13 points, or 5.06 percent at that time for over a minute,” a KRX official said. The s


By Asia News Network
March 12, 2020

Business, Diplomacy

Final temporary hospital in Wuhan closes its doors

A total of 15 such hospitals, converted from exhibition halls, sports stadiums and warehouses, received more than 12,000 patients. All the 15 temporary hospitals built to exclusively receive novel coronavirus patients in Wuhan, Hubei province, have been closed, with the daily number of reported new cases hitting a record low. Wuchang Temporary Hospital, which was converted from a sports stadium, closed on Tuesday afternoon after its final 49 patients were discharged, making it the last of the temporary hospitals in Wuhan, the centre of the epidemic in China, to close its doors. The hospital, which was converted within two days, received a total of 1,124 patients with mild symptoms of COVID-19 in the 35 days of its operation. No patients died in the hosp


By China Daily
March 11, 2020

Business, Diplomacy

Social media curbs removed in Jammu and Kashmir after seven months

 Jammu and Kashmir administration removes restrictions on social media use across Union Territory almost seven months after a communication clampdown since the Centre’s announcement to scrap the special status of the erstwhile state under Article 370 and its bifurcation into two Union Territories of J&K and Ladakh. The Jammu and Kashmir (J&K) administration on Wednesday removed restrictions from social media usage across the Union Territory almost seven months after a communication clampdown on the eve of the Centre’s August 5 announcement to scrap the special status of the erstwhile state under Article 370 and its bifurcation. The directions came after a review of the situation by the J&K Home department. The order, issued without the


By The Island
March 10, 2020

Business, Diplomacy

15 Korean pharmas, 4 state institutes research coronavirus

South Korea’s state-run research institutes and pharmaceutical firms are working hard to find a cure for the new coronavirus. South Korea’s state-run research institutes and pharmaceutical firms are working hard to find a cure for the new coronavirus, according to news reports Monday. Around 15 firms and four institutes here are burning the midnight oil to get an effective cure, according to Korea Pharmaceutical and Bio-Pharma Manufacturers Association. KPBMA Chairman Won Hee-mok emphasized the synergies between private and public research bodies in yielding a faster outcome. The association identified Korean companies working on vaccines — including SK Bioscience, GC Pharma, Boryung Biopharma, Sumagen and G+FLAS Life Sciences. T


By Asia News Network
March 9, 2020

Business, Diplomacy

‘Incredible India’ now being viewed as intolerant India, says FM Qureshi

 “Modi’s policies are taking a bloody and dangerous turn,” says the foreign minister. Foreign Minister Shah Mehmood Qureshi on Thursday stated that ‘Incredible India’ is now being viewed as “intolerant India”, and ‘Shining India’ as “burning India”, adding that the country is now facing international scrutiny like never before. The foreign minister expressed these views while speaking at a seminar, organised by the Centre for Aerospace and Security Studies, in Islamabad. During his address, Qureshi stated: “Indian Prime Minister Narendra Modi’s policies are taking a bloody and dangerous turn, as predicted by Prime Minister Imran Khan.” Referring to the country


By Asia News Network
March 6, 2020