Home Finance It is unlikely that Chinese investment in the US will pick up under Trump

It is unlikely that Chinese investment in the US will pick up under Trump

by Eclipsnews
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Cho Tak Wong, the chairman of auto glass giant Fuyao Glass, bought General Motors’ vacant factory in Moraine, Ohio, in 2014.

The Washington Post | The Washington Post | Getty Images

Chinese investment in the US has fallen dramatically since Donald Trump’s first term. This trend is unlikely to reverse if Trump returns to the White House, analysts said.

Trump threatened additional tariffs on Chinese goods shortly after his inauguration Monday, building on an increasingly tough U.S. stance toward Beijing.

“That’s probably the last thing on Trump’s mind, trying to stimulate [Chinese companies] to invest here,” says Rafiq Dossani, economist at the American think tank RAND.

“There’s an ideological mismatch. The whole rhetoric is: keep China out of the US and let their products come in, which are cheap,” he said in an interview earlier this month. But beyond that, “don’t let them come in.”

In recent weeks, Emirati real estate giant Damac has committed $20 billion to build data centers in the US, while SoftBank CEO Masayoshi Son announced a $100 billion investment to develop artificial intelligence in the US during Trump’s four-year term.

Trump's position on China remains unclear, the US ambassador says

According to the latest figures, Chinese investment deals in the US have slowed dramatically Data from the American Enterprise Institute. Only $860 million flowed into the US in the first six months of 2024, after $1.66 billion in 2023. That’s a sharp drop from $46.86 billion in 2017, when Trump began his first term.

At its height, Chinese companies had made high-profile American acquisitions, such as the purchase of the Waldorf Astoria hotel in New York. But regulators on both sides have stemmed the flow.

“Chinese investment in the US has slowed dramatically since Beijing tightened controls on capital outflows in 2017, followed by a series of regulatory policies in the US aimed at excluding investments in certain sectors,” said Danielle Goh, senior research analyst at Rhodium Group. in an email.

In the “foreseeable future,” she does not expect Chinese investment in the US to recover the peak levels seen in 2016 to 2017. Goh pointed out that instead of acquisitions, Chinese companies have turned more to small joint ventures with US companies or greenfield investments, in which companies are built from scratch.

For example, Chinese battery manufacturing company EVE Energy is the technology partner with a 10% stake in a joint venture with the Accelera division of the American engine company Cummins, Daimler Truck and PACCAR. The companies announced in June 2024 that they were planning a battery factory in Mississippi, which would begin production in 2027 and create more than 2,000 jobs.

Since the Covid-19 pandemic, the US-China Chamber of Commerce has mainly helped Chinese e-commerce companies set up local offices, instead of setting up manufacturing companies, the nonprofit’s president Siva Yam told CNBC .

“Most of these investments today tend to be a little smaller, so they are not on the radar and are easier to approve,” he said, referring to regulators in both the US and China. But he remained unsure about whether Chinese companies could use investments to offset the impact of tariffs.

Individual US states have become increasingly wary of Chinese investments. Politico reported this last spring more than twenty states introduced new restrictions on land purchases by Chinese citizens and companies, or updated existing rules.

Chinese hackers in December targeted a government office that reviews foreign investments in the United States. CNN reports thisciting US officials. This was part of a broader breach at the Treasury Department, which declined a request for comment from CNBC.

Deal making strategy?

Trump has indicated that tariffs could be used to force Chinese investment in the US

In his speech accepting the Republican nomination, he said: “I will bring auto jobs back to our country, through the right use of taxes, tariffs and incentives, and will not allow massive auto factories to be built in Mexico , China, or other countries.”

“The way they are going to sell their product in America is through BUILD it in Americaand ONLY in America. This will create tremendous jobs and prosperity for our country,” he said, according to an NBC News transcript.

Chinese battery giant CATL reportedly said in November that it would build a U.S. factory if Trump allowed it. The company did not immediately respond to a request for comment.

The advocacy group Center for American Progress pointed out in December that during his first term Trump canceled the restrictions about Chinese telecommunications company ZTE – just days after the Chinese government and Chinese banks invested $1 billion in a Trump Organization-affiliated theme park in Indonesia.

Trump’s transition team did not immediately respond to a request for comment on the ZTE deal or the opportunities for Chinese companies to invest in the US

Even if Trump were to welcome more Chinese investment, or force it through tariffs, big investments are long-term processes that won’t happen overnight, points out Derek Scissors, a senior fellow at the American Enterprise Institute.

Then there is the unpredictability of the president-elect’s policies.

‘Trump saying that the US will be open to Chinese companies by 2025 is no guarantee [even] for 2029,” he said.

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