Chinese investment in America is unlikely to gather under Trump

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Cho Tak Wong, chairman of auto glass giant Fuyao Glass, bought a General Motors manufacturing plant in Moraine, Ohio, in 2014.

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Since Donald Trump’s first term in office, Chinese investments in the US have fallen sharply. Analysts say this trend is irreversible when Trump returns to the White House.

Since taking office on Monday, Trump has threatened more tariffs on Chinese goods and the US is taking a tougher stance against Beijing.

“That’s probably the last thing on Trump’s mind, trying to encourage[Chinese companies]to invest here,” said Rafiq Dosani, an economist at the US-based think tank Rand.

In an interview earlier this month, he said, “There is an ideological inconsistency. All the talk is to protect China from the United States, let their products come in, which is a low level.” But apart from that, it says, “They will not enter, they will not enter.”

In the past few weeks, Emirates property giant Damac has pledged $20 billion to build data centers in the US, while Softbank CEO Masayoshi Son announced a $100 billion investment in artificial intelligence in the US during Trump’s four-year term.

Recent data indicate that Chinese investment deals in the US have slowed down significantly Information from the American Enterprise Institute. In the year Only $860 million came into the U.S. in the first six months of 2024, after $1.66 billion in 2023. That’s down significantly from $46.86 billion in 2017, when Trump began his first term.

At its peak, Chinese companies made high-profile American purchases such as the Waldorf Astoria hotel in New York. But the controllers on both sides killed the flow.

“Chinese investment in the U.S. has fallen sharply since Beijing clamped down on capital outflows in 2017,” said Danielle Goh, senior research analyst at Rhodium Group, in an email.

“In the foreseeable future” she does not expect Chinese investments in the US to recover from the high levels seen in 2016 to 2017. Goh pointed out that instead of acquisitions, Chinese companies are turning to small partnerships with US companies or greenfield investments to build businesses from scratch.

For example, Chinese battery manufacturing company EV Energy is a technology partner and owns a 10% stake. Joint work with US engineering company Cummins’ Accelera division, Daimler Trucks and PACCAR. The companies announced in June 2024 plans to build a battery plant in Mississippi that would begin production in 2027 and create more than 2,000 jobs.

Since the Covid-19 pandemic, the US-China Chamber of Commerce has helped Chinese e-commerce companies set up local offices instead of manufacturing businesses, the nonprofit’s president, Siva Yam, told CNBC.

“Most of the investments these days are quite small, so they’re not on the radar, they’re easy to approve,” he said, referring to regulators in the US and China. But it remains uncertain whether Chinese companies will be able to use investments to offset the impact of the tariffs.

US states have become more wary of Chinese investment. Last spring, Politico reported More than 20 states Chinese citizens and companies have been passing new restrictions on land acquisitions or updating existing regulations.

Chinese hackers have targeted a government office that reviews foreign investment in the United States. CNN reportedCiting US officials. It’s part of a broader breach by the Treasury Department, which declined CNBC’s request for comment.

A negotiation strategy?

Trump has indicated that tariffs can be used to force Chinese investment in America

In his acceptance speech for the Republican nomination, he said, “I will bring auto jobs back to our country, using taxes, tariffs and incentives properly and will not allow the construction of huge auto manufacturing plants in Mexico, China.” or other countries.”

“It’s a way for them to sell their product in America. Build in AmericaAnd only in America. This will create a wide range of jobs and resources for our country, according to an NBC news report.

Chinese battery giant CATL said in November it would build a US factory if Trump allows it. The company did not immediately respond to a request for comment.

As the advocacy group Center for American Progress reported in December, in his first term, Trump canceled the restrictions It comes just days after the Chinese government and Chinese banks invested $1 billion in Chinese telecommunications company ZTE — linked to the Trump Organization — in Indonesia.

Trump’s transition team did not immediately respond to requests for comment on the ZTE deal or whether Chinese companies would invest in the U.S.

Even if Trump welcomes more Chinese investment or imposes tariffs, big investments are a long-term process that won’t happen overnight, said Derek Siss, a senior fellow at the American Enterprise Institute.