Chinese investment in the US is likely to rise under Trump

Chinese investment in the US has declined significantly since Donald Trump’s first term. That trend is unlikely to reverse when Trump returns to the White House, analysts said.

Trump has He threatened additional tariffs on Chinese goods Shortly after taking office on Monday, the US has been building an increasingly tough stance towards Beijing.

“That’s probably the last thing on Trump’s mind, trying to incentivize (Chinese companies) to invest here,” said Rafiq Dossani, an economist at the US-based RAND think tank.

“There’s an ideological mismatch. It’s all rhetoric, keeping China out of the US, getting their products in, which are low-end,” he said in an interview earlier this month. But other than that, “no, don’t let him in.”

In recent weeks, the Emirati-owned giant Damac has pledged $20 billion While SoftBank CEO Masayoshi Son announced to build data centers in the US 100 billion dollar investment During Trump’s four-year term in the US to develop artificial intelligence.

Chinese investment deals in the US have slowed dramatically, according to the latest Data from the American Enterprise Institute. In the first six months of 2024, just $860 million flowed into the US, followed by $1.66 billion in 2023. That’s down significantly from $46.86 billion in 2017, when Trump began his first term.

At the summit, Chinese companies made large purchases in the US, such as buying The Waldorf Astoria Hotel in New York. But regulators on both sides have blocked the flow.

“Chinese investment in the US has slowed dramatically since Beijing tightened controls on capital outflows in 2017, followed by a series of regulatory policies in the US. excluding investments in certain sectors,” Danielle Goh, senior research analyst at Rhodium Group, said in an email.

“For the foreseeable future,” he does not expect Chinese investment in the U.S. to return to the high levels seen in 2016 to 2017. Goh noted that instead of acquisitions, Chinese companies have turned more to joint ventures or greenfield investments with US companies, in which businesses are built from scratch.

For example, it is a 10% technological shareholder of the Chinese battery manufacturer EVE Energy joint venture Cummins Accelera division with US motor company Daimler Truck and PACCAR. The companies announced in June 2024 that they were launching plans for a battery factory 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 mostly helped Chinese e-commerce companies set up local offices, rather than setting up manufacturing businesses, the nonprofit’s president, Siva Yam, told CNBC.

“Most of these investments today tend to be a little bit smaller, so they’re not on the radar, they’re easier to approve,” he said, referring to U.S. and Chinese regulators. But he remained uncertain whether Chinese companies could use the investment to offset the impact of the tariffs.

Individual US states have become increasingly wary of Chinese investment. Politico reported last spring More than 20 states Chinese citizens and businesses were accepting new restrictions on land purchases or updating existing rules.

Chinese hackers targeted a government office that oversees foreign investment in the United States in December. CNN reportedciting US officials. This was part of a broader breach by the Treasury Department, which declined CNBC’s request for comment.

“It’s the way they’re going to sell their product in America BUILD in Americaand ONLY in America. This will create huge jobs and wealth for our country,” he said, according to an NBC News transcript.

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

The advocacy group Center for American Progress stated in its first term in December, Trump canceled the restrictions About Chinese telecom company ZTE – just days after the Chinese government and Chinese banks invested $1 billion in a theme park linked to the Trump Organization in Indonesia.

The Trump transition team did not immediately respond to a request for comment on the ZTE deal or opportunities for Chinese companies to invest in the US.

Even if Trump welcomed more Chinese investment, or forced it through tariffs, big investments are long-term processes that won’t happen overnight, said Derek Scissors, senior fellow at the American Enterprise Institute.

Then there is the unpredictability of the president’s policies.

“Trump saying the US is open to Chinese companies in 2025 is no guarantee (even) for 2029,” he said.