China direct investment in the US set to top US$20b for the first time this year

The strong appetite of private mainland companies for American assets has put total Chinese foreign direct investments in the United States on pace to breach the US$20 billion mark for the first time this year.

Chinese outbound investments to the US surged to a record US$18.4 billion in the first six months of this year, driven by strategic corporate acquisitions of consumer goods-related, entertainment and information technology assets.

That was almost triple the US$6.4 billion of Chinese foreign direct investments in the US in the first half of last year, and more than the total US$15.3 billion made last year, according to a report released over the weekend by research firm Rhodium Group.

Total Chinese outbound investments in the US have exceeded US$10 billion for three consecutive years.

While certain Western media reports earlier this year argued that the recent jump in Chinese outbound foreign direct investments largely represented capital flight due to foreign exchange volatility and the mainland’s lingering economic slowdown, Rhodium analysts Thilo Hanemann and Cassie Gao said the majority of US deals in the first half were vital business transactions.

“More than 80 per cent of all Chinese foreign direct investments in the US in the first half of this year can be characterised as strategic investments — real economy firms investing in their core areas of business,” the analysts said.