As Beijing and Washington exchange the first shots of the trade war, new U.S. tariffs dominate the headlines. But perhaps the biggest shift in U.S.-China economic relations is happening elsewhere: China’s foreign direct investment (FDI) dropped by 92 percent year-on-year in the first half of 2018 — and there’s little chance of the number picking up anytime soon, thanks to policy changes on both sides of the Pacific.
After Chinese FDI in the United States hit its peak of $46 billion in 2016, the number fell to $29 billion the following year. According to a Rhodium Group report published last month, Chinese acquisition and greenfield investment in the United States from January to May this year clocked in at only $1.8 billion, the lowest net value in seven years. In addition to investing far less, Chinese companies are also divesting at an unprecedented rate, putting their existing foreign assets, such as real estate holdings, up for sale.