US-China cross-border investments hit 5-year low as decoupling deepens amid trade war
- Investment between the US and China plunged 18 per cent to US$13 billion in the first six months of 2019, report says
- The study was conducted by the Rhodium Group and the National Committee on US-China Relations
American and Chinese investors’ appetite to deploy capital into each other’s projects and deals has dropped to a five-year low as trade tensions propelled the decoupling of the two economies.
Investment between the United States and China plunged 18 per cent to US$13 billion in the first six months of 2019 and reached the lowest level since the first half of 2014, according to a report released on Thursday by the Rhodium Group and the National Committee on US-China Relations.
The drop reflects an increasingly hostile investment environment between the world’s largest economies that has been exacerbated by the trade war and an economic slowdown in China.
“The decline was primarily driven by Chinese [capital control] policies and market conditions,” the report said.
Global outbound mergers and acquisition activity by mainland Chinese firms declined sharply “as Beijing has tightened administrative control on outbound capital flows to address financial system risks and macroeconomic concerns”, according to the report.
“Efforts to rein in high debt and financial leverage, slowing domestic growth and growing geopolitical risk have further weighed on firms’ ability to invest abroad,” it said.