U.S.-China tensions cited in significant drop . . .
Chinese investment in the U.S. fell by nearly 90% between 2016 and 2018, from US$46.5 billion to US$5.4 billion. While a slowing Chinese economy and tougher Chinese restrictions on foreign spending have made it more difficult for Chinese investment to reach the U.S., experts agree that the bulk of the drop is likely due to tougher U.S. regulatory scrutiny and a deteriorating climate in the U.S. toward Chinese investment. The drop has been most significant in former magnets for investment: agriculture, autos, energy, real estate, and tech. And in places such as: California, Michigan, Missouri, New York, South Carolina, and Texas.
Suspicion toward Chinese investment . . .
While trade war issues dominate headlines, the drop in new investment is yet another sign of the extent the two countries are moving toward an economic decoupling, one fuelled by mutual suspicion. Testifying recently before a Senate Committee, FBI Director Christopher Wray said that Chinese companies are not independent of the Chinese Communist Party, and that the country uses a variety of means to steal intellectual property. He pointed at university partnerships and graduate students as having “created a pipeline of intellectual property heading back to China.”
Investment chill to spread north?
According to APF Canada’s Investment Monitor data, the flow of Chinese investment in Canada rose more than two-fold between 2016 and 2018, from C$4.2 billion to C$9.9 billion. While it is still too early to show what kind of impact tensions between Canada and China will have on investment, even small dollar values are sparking debate. The recent outcry over the Union of B.C. Municipalities accepting C$6,000 in sponsorship money from China speaks to the sensitivity of Chinese investment in Canada, and that the issue has moved well beyond large deals in energy, real estate, and 5G security.
- APF Canada: Investment Monitor
- Bloomberg: FBI chief says China is trying to ‘steal their way’ to dominance
- The New York Times: Chinese money in the U.S. dries up as trade war drags on