Opinion & Analysis

China’s Foreign Direct Investment into US Dropped, Says Report

Foreign Direct Investment from China into the United States shrunk for the second year in a row.

According to the new data by the Rhodium Group, in 2018 Chinese FDI in the United States fell to just $4.8 billion — a massive decline from $29 billion in 2017 and $46 billion in 2016.

The figure of 2018 released by the independent group is a 90 percent decline from 2016 and the lowest level in FDI by China into the United States since 2011.

The report of the decline comes in between the on-going trade war between the two countries. China has been allegedly asking its companies to reduce their global holding and stocks so that it can reduce its debt level.

According to the same data, almost $13 billion worth of assets were sold in 2018 by China in the United States. China bought much of these assets in the 2015⎯2016 investment booms. Chinese net direct investment into the United States saw a decline of $8 billion in 2018, including those divestitures.

The group also added that there is also a $20 billion worth of divestitures that is still pending.

In recent months since the tariff war started between the two economies, Chinese companies have started selling assets. Anbang has already put up a number of its U.S. luxury hotels for sale, HNA Group has also allotted billions of dollars’ worth of assets for sale, Fosun International is willing to sell a stake in its New York property, 28 Liberty, and Dalian Wanda Group is looking for buyers for a sale of its stake in Legendary Entertainment.

Though Foreign Direct Investment from China into the United States fell, venture capital funding from Chinese resources into the United States has gained a record high of $3.1 billion, the Rhodium group said.

The National Association of Realtors data shows that amidst the contracting Foreign Direct Investment, Chinese investors are still on the top in buying residential housing in the United States both in terms of units and value. This shows the growing interest among the Chinese middle class in the American market.

Related Posts