Donald Trump: A Wound on Chinese Investments in the U.S.

Chinese investments in the US have declined dramatically since his first term and this trend is unlikely to be reversed as Trump’s (20,1,2024) and his return to the White House are expected to report analysts to CNBC. Trump threatened with additional duties on Chinese products immediately after the inauguration, based on the increasingly tough attitude of the US towards Beijing. “This is probably the last thing in Trump’s mind, to try to motivate Chinese companies to invest here,” said Rafiq Dossani, an economist at think tank RAND. CORVERSE “There is an ideological mismatch. All rhetoric is, keep China out of the US, let their products come, which are low-quality,” he said in an interview earlier this month. But beyond that, “don’t, don’t let them come”. Over the past few weeks, Emirate’s real estate giant Damac has pledged to spend $20 billion on building data centers in the US, while SoftBank CEO Masayoshi Son announced USD 100 billion investments to develop artificial intelligence in the US during Trump’s four-year term. Chinese investment agreements in the US have been drastically slowed down, according to the latest American Enterprise Institute data. Just $860 million flowed into the US in the first six months of 2024, after $1.66 billion in 2023. This is dramatically reduced from $46,86 billion in 2017, when Trump began his first term. CORVERSE At the peak, Chinese companies had made high-profile acquisitions in the US, such as the purchase of the Waldorf Astoria Hotel in New York City. But regulators on both sides have cut off the flow. “Chinese investments in the US have slowed dramatically since Beijing hardened capital outflow control in 2017, followed by a series of regulatory policies in the US aimed at excluding investments in certain sectors,” said Danielle Goh, a senior research analyst for the Rhodium Group. In the ‘visible future’, it does not expect Chinese investments in the USA to recover the maximum levels observed during 2016-2017. Goh pointed out that instead of acquisitions, Chinese companies have turned more to small joint ventures with American companies or to ‘green field’ investments, in which businesses are built from scratch. For example, the Chinese battery manufacturer EVE Energy is the technological partner with a 10% share in a consortium with the Accelera department of the American Cummins engine company, Daimler Truck and PACCAR. Companies announced in June 2024 that plans for a battery factory in Mississippi are beginning to produce in 2027 and create more than 2,000 jobs. After the pandemic, the U.S.-China Chamber of Commerce mainly helped Chinese e-commerce companies create local offices, rather than create productive businesses, the president of the non-profit organization Siva Yam told CNBC. “Most of these investments today tend to be a little smaller, so they are not on radar, easier to approve,” he said, referring to regulatory authorities in both the US and China. However, it remained uncertain whether Chinese companies could use investments to compensate for the effects of the duties. Individual US states have become increasingly cautious about Chinese investments. Last spring, Politico reported that more than 20 states establish new restrictions on land markets by Chinese citizens and companies or update existing rules. Chinese hackers in December targeted a government office examining foreign investment in the United States, CNN reported, citing American officials.