China-US investment plunges by a third amid tighter curbs from both sides, report finds
Beijing’s crackdown on foreign spending by private companies and tighter scrutiny of inbound deals by US authorities are behind the decline
Foreign direct investment (FDI) between the US and China declined by almost a third in 2017 from the previous year, mainly because of Beijing’s curbs on overseas spending and Washington’s tighter scrutiny of Chinese investments, a new report has found.
FDI transactions between the two countries totalled US$43.4 billion, a 28 per cent drop from the US$60 billion recorded in 2016, according to research carried out by the Rhodium Group and the National Committee on US-China Relations, an American think tank.
The main reason for the drop was a decline in Chinese investment in the US to US$29 billion from US$46 billion the year before. The drop would have been even steeper if it wasn’t for the US$18 billion in Chinese acquisitions announced in 2016 but completed last year, the report said.
American investment into China was almost unchanged at US$14 billion compared with US$13.8 billion in 2016.
Numerous sectors in China remain closed or restricted to foreign investment. These restrictions contribute to a view in the US that China does not play fair
Beijing imposed a slew of new restrictions on outbound investment last year to address balance-of-payment concerns and minimise risks to the financial system stemming from debt-fuelled overseas spending.