Chinese direct investment in the United States dropped 83% in 2018, pushed down by growing mistrust between the world’s two biggest economies.
In a report, the Rhodium Group research firm said that China sank $5 billion last year into direct investments in America, down from $29 billion in 2017 and a record of $46 billion in 2016. Direct investments include things like putting up factories, not financial investments like buying stocks.
The numbers fell partly because Beijing sought to rein in deeply indebted investors and partly because the U.S. regulators have stepped up scrutiny of Chinese investments.
Rhodium estimates that China dropped deals worth $2.5 billion last year because they wouldn’t pass muster with the Committee on Foreign Investment in the United States, which reviews foreign investments with national security implications. Chinese investment in the U.S. information and communications technology industry plunged to $200 million last year from $2.5 billion in 2017.
U.S. direct investment in China, meanwhile, dipped to $13 billion from $14 billion in 2017. U.S. investment in the Chinese information and technology industry dropped to $2.1 billion last year from $4.1 billion in 2017 and $4.3 billion in 2016.
U.S.-China trade relations have deteriorated since President Donald Trump took office.
The U.S. and China have slapped tariffs on hundreds of billions of dollars of each other’s products in a dispute over Beijing’s aggressive drive to challenge American technological dominance. Congress last year passed a law making it harder for the Chinese to invest in U.S. companies and to buy cutting-edge technology. The U.S. is also putting restrictions on sensitive tech exports.