- Chinese foreign direct investment in the US has plummeted, leaving places like Silicon Valley and the New York real estate market vulnerable.
- Chinese FDI peaked in 2016 at $US46.5 billion – this has now fallen to $US5.4 billion after Trump took office.
- A slowing Chinese economy and growing distrust between the countries is being blamed.
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Chinese foreign direct investment into the United States has plummeted since Trump took office, with real estate, autos, tech and agriculture – industries which have all benefited from China’s boom – set to lose out.
In 2016, FDI peaked at $US46.5 billion, but now nearly 90% of this has gone, with just $US5.4 billion in 2018 according to data from Rhodium Group.
Previously money has streamed into America from China. As the New York Times notes, places like Michigan, South Carolina, Missouri and Texas all benefited from job growth due to Chinese investment.
However, with Trump’s trade war causing an increasing level of distrust between the two superpowers, as well as China’s economic slowdown, and stricter capital controls for Chinese investors, investment has dropped.
The drop in Chinese investment isn’t likely to harm the US economy significantly as a whole, but industries and states that have large amounts of investment could struggle due to their dependence on Chinese cash.
Craig Allen, the president of the US-China Business Council, told the New York Times: “The Chinese hear from our state and local officials that they’re welcome,” with states like Michigan and rural economies having new factories and jobs created from Chinese investment.
Allen continued: “What they’re hearing from federal officials is quite different,” adding that it’s going to have a detrimental effect on poorer states.
In the housing market, Chinese investors have been selling off commercial assets – in 2018, there were 37 property acquisitions worth $US2.3 billion, but $US3.1 billion of commercial real estate was sold according to a report by Cushman & Wakefield.
The New York Times also cited a report by The National Association of Realtors that the purchase of homes in America by Chinese buyers fell by 65% in the year to March.
Even if the two superpowers come to a deal when they next meet, with Chinese firms like Huawei blacklisted and controls on the types of American tech that can be sold abroad, Chinese investment isn’t set to increase.
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