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Investment Between the US and China at a Low of the Decade

Investment between the world’s two largest economies peaked in nearly a decade in the first half of 2020. The coronavirus pandemic led capital flows between the United States and China to fall by 16.9 %. They fell to 10.9 billion dollars between January and June. According to Rhodium Group consultancy and the National Committee for Relations between the US and China, it has been the worst since 2011.

The unrest is growing with the integration of technology between Washington and Beijing. Many other companies, both Chinese firms operating in the US and US firms with a presence in China will divest, the report says. Between 2016 and 2017, investment between the two countries reached almost 40,000 million dollars.

According to the report, US companies’ investment in China in the first half of 2020 plummeted 31% to $4.1 billion. Meanwhile, the investment of Chinese companies in the US increased by 38% to $4.7 billion. That was mainly due to the purchase by a consortium led by Tencent Music of a minority stake in the Universal Music group for $3.4 billion.

 

Chinese companies must sell their US operations

However, citing risks to the country’s national security, the administration of US President Donald Trump has implemented numerous obstacles. This ensued to hinder Chinese companies’ investment and operation.

Among them, the inclusion of the telecommunications giant Huawei in its blacklist of companies or the saga surrounding TikTok stands out more recently. The White House tenant issued a decree to force its parent company, China’s ByteDance, to sell its US operations or face a shutdown of its services on this side of the Atlantic.

ByteDance is currently seeking approval of an agreement structured as a partnership with Oracle. Thus, creating a new US-based company, rather than a direct sale. 

Stephen Orlins, chairman of the National Committee for US-China Relations, stated that the countries are moving toward decoupling right now. From his perspective, relations between the US and China have been the worst since the 1970s.

 

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