Trade wars hit US-China investments
US and Chinese investors mutually invested in each other’s countries, the lowest level of the last five years due to rising trade wars.
According to a report released by the Rhodium Group, direct investments between the US and China fell 18 percent in the first six months of this year to $ 13 billion, compared to the same period last year.
Uncertainty and global economic slowdown caused by trade wars as well as capital controls implemented by China were effective in the decline in investments.
Due to the slowing Chinese economy, Beijing administration, trying to prevent the escape of capital out of the country, explaining Rhodium Group, China’s investment in the US to bring closer control of Chinese investment in Trump said that the negative impact on China’s investments in the United States.
As a result, Chinese companies’ mergers and acquisitions in the US dropped from $ 46 billion in 2016 to $ 29 billion in 2017, $ 5 billion in 2018, and only $ 3.5 billion in the first 6 months of 2019.
The largest decline in China’s direct investments in the US was seen in the real estate and hospitality sector. Investments by Chinese firms in this area fell from $ 8.66 billion in 2016 to $ 280 million in the first half of this year, down 97 percent.
Many Chinese companies were planning to invest in direct manufacturing in the US to bypass Trump’s new customs duties, but the worsening of the trade wars caused them to be canceled.
Major Chinese groups such as HNA, Anbang and Wanda, sold assets of US $ 13 billion in 2018. In 2018, Chinese firms made a net outflow of US $ 8 billion from US investments.