US trade war forces businesses to rethink Chinese investments amid fears dispute will drag on into new year
- Foreign direct investment inflows to China drop in first 11 months of year as concerns grow there will not be a swift resolution to the tensions
- One survey found that around a third of companies were considering delaying or cancelling investments
The US trade war has prompted some overseas companies to rethink whether they should invest in new plants and equipment in China, despite the temporary pause in hostilities.
Foreign direct investment inflows into China fell in the first 11 months of this year, according to the latest government data, and concerns are mounting among corporate leaders and investors about how long trade tensions between the world’s two biggest economies will last.
Economists are predicting that China’s gross domestic product growth could slip below 6 per cent next year if the trade dispute escalates further and continues to filter down to the private sector. Beijing has a 6.5 per cent GDP growth target for this year.
“We’re hearing that a lot of investors are just keeping their powder dry,” said William Zarit, the chairman of the American Chamber of Commerce in China.
“They’re waiting to see what happens.”
A recent survey by AmCham China and its sister organisation AmCham Shanghai found that 31.1 per cent of businesses who responded were already considering delaying or cancelling investments in China as a result of the ongoing trade tensions.