A decline of investment as a consequence of the trade dispute between China and the United States
Direct Investment (FDI) in the U.S. economy reached a record low since 2011. In 2018, they fell to less than five billion dollars.
4.8 billion. This is the amount of U.S. public debt in the hands of the Chinese. But this is not all. In parallel with getting rid of U.S. bonds, Chinese companies were selling American securities and businesses in the United States itself. And this is minus 8 billion.
The reason for this situation is the prolonged trade confrontation between the states, as well as checks on investments, which the Americans initiated against organizations from the Celestial Empire. And China itself is taking measures to control the outflow of funds from the country. All this has led to logical consequences. In 2017, China’s direct investment in the United States was 29 billion dollars. And in 2016 – 46 billion. Consequently, if you compare with 2016, the figure fell by 90%.
It is known that Chinese corporations in 2018 sold American assets to 13 billion dollars. Consequently, China’s FDI in the U.S. has a negative balance and approximately equal, as noted above, minus eight billion dollars. Only Anbang, the largest Chinese holding company, decided to get rid of several U.S. hotels purchased in previous years. The total price of the sold business is $5.5 billion.
An investment company from Shanghai Fosun International is looking for buyers of its share in the skyscraper 28 Liberty (New York). Also the producer of feature films Legendary Pictures can be sold by Chinese investors back to the Americans.
Decline of investments: what is going on?
Each of the parties of the trade war, initially dreaming of profit, suffers losses and seems to have already realized that it was flirting. Despite the truce negotiations, the Celestial Empire has no intention of weakening its control over finances going abroad. In turn, America has repeatedly involved the profile committee in checking Chinese funds entering the country. For national security reasons, a huge number of deals between Chinese and American firms have been cancelled.
Chinese firms that are in the U.S., in general, are in a state of uncertainty. On the issue of imports and exports between the two countries, there has been progress. Tariffs on imports of goods from China to the United States will not increase for the time being. This was announced in Washington in early December 2018.
The expected conclusion of trade disputes is unlikely to reduce the risks of slowing down the development of economies – both Chinese and American.