US-China investment at risk of slowdown under Senate proposal for greater FDI scrutiny, report says
- Up to 43 per cent of American investment in China between 2000 and 2019 would merit review under the proposed new legislation
- US firms are also likely face greater legal and compliance costs, while the US-China investment environment will change
A proposed new screening regime for American outbound investment risks harming investment relations with China and making business more difficult for US multinationals in the world’s No 2 economy, a new report said on Wednesday.
The so-called National Critical Capabilities Defence Act (NCCDA) was introduced by US senators last year amid heightened geopolitical tensions and concern about pandemic-driven disruptions to production of critical goods.
A new analysis has found that if adopted, up to 43 per cent of American foreign direct investment (FDI) to China between 2000 and 2019 would have merited review under the act.
In value terms, that amounts to 45 per cent of the US$243 billion in FDI recorded over the period, said the report written by research firm Rhodium Group and the non-profit National Committee on United States-China Relations.