US-China investment flows slide to nine year-low as bilateral tensions escalate
Investment between the United States and China tumbled to a nine-year low in the first half of 2020, hit by bilateral tensions that could see more Chinese companies come under pressure to divest U.S. operations, a research report said.
HONG KONG: Investment between the United States and China tumbled to a nine-year low in the first half of 2020, hit by bilateral tensions that could see more Chinese companies come under pressure to divest U.S. operations, a research report said.
Investment, both direct investment by companies and venture capital flows, between the two countries fell 16.2per cent to US$10.9 billion in January-June from the same period a year earlier - also hurt by the coronavirus pandemic, according to figures from consultancy Rhodium Group.
Citing national security risks posed by Chinese technology firms, U.S. President Donald Trumps administration has sharply expanded actions to hobble Chinese companies.
This has included putting telecoms giant Huawei Technologies Co Ltd on its trade blacklist, threatening similar action for Semiconductor Manufacturing International Corp and ordering TikTok owner ByteDance to divest the short-form video app.
"At a time of rising discomfort with US-China technology integration numerous other companies - both Chinese firms operating in the U.S. and U.S. firms with a presence in China may be forced to divest," the report said.
It added that the U.S. treatment of ByteDance and the broader shift away from U.S.-China technology integration may lead to policies which make it more difficult for U.S. tech firms to operate in China.
Investment by U.S. firms in China in the first half tumbled 31per cent to US$4.1 billion, while investment by Chinese companies in the United States rose 38per cent to US$4.7 billion, the report said. That was mostly due to one deal - a Tencent Music -led consortium’s purchase of a minority stake in Universal Music group for US$3.4 billion.