Chinese Investment Decline in the U.S.: What Does the Future Hold?
In 2014, Cho Tak Wong, the chairman of auto glass giant Fuyao Glass, purchased the vacant General Motors manufacturing plant in Moraine, Ohio.
Chinese investments in the U.S. have seen a sharp decline during Donald Trump’s first term, with analysts predicting that this trend is unlikely to reverse as Trump returns to the White House.
Trump’s tough stance on China, including threats of additional tariffs, has deterred Chinese companies from investing in the U.S. “That’s probably the last thing on Trump’s mind, is trying to incentivize [Chinese companies] to invest here,” said economist Rafiq Dossani from U.S.-based think tank RAND.
Recent investments by Emirati property giant Damac and SoftBank CEO Masayoshi Son in the U.S. highlight a shift towards other non-Chinese entities for major investments.
Impact of Declining Chinese Investments
According to the American Enterprise Institute data, Chinese investment in the U.S. plummeted to $860 million in the first six months of 2024 from $46.86 billion in 2017 when Trump took office.
The curbed flow of Chinese investments in the U.S. can be attributed to heightened regulatory scrutiny and Beijing’s control over capital outflows in 2017.
While Chinese companies may now focus on smaller joint ventures or greenfield investments, the peak levels of investment seen in 2016-2017 are unlikely to return anytime soon.
Future Prospects and Challenges
Trump’s strategy of using tariffs to coerce Chinese investment in the U.S. faces uncertainties, with conflicting views on the long-term impact of such policies.
Even if Trump were to reverse course and welcome Chinese investment, the significant investments are complex processes that take time to materialize.
The unpredictability of future policies under Trump or any future administration adds to the uncertainty surrounding Chinese investments in the U.S.
Deal-making strategy?
Trump’s approach to tariffs and taxes has been seen as a means to bring back manufacturing jobs to the U.S. and restrict manufacturing plants from being built in other countries.
While some Chinese companies have expressed interest in investing in the U.S., the long-term impact of such investments remains uncertain.
The Center for American Progress highlighted Trump’s past actions regarding Chinese investments, indicating a complex relationship between tariffs and investment decisions.
Ultimately, the future of Chinese investment in the U.S. remains uncertain, with various factors influencing the dynamics between the two countries.