NKF Expert Highlights Trade Tensions Stalling Chinese FDI in US

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NKF Senior Managing Director, Gregg Wassmansdorf, recently authored his latest column for fDi Magazine. In this opinion piece, Mr. Wassmansdorf provides an overview of the current state of trade between the two nations. He explains that “China FDI into the US, having soared since 2010, has stalled in the face of the trade war between the two major economies, and likely to remain so” for, at least, the short-term.
 
Excerpt below.

“For several decades, one might say the US-China relationship was a one-way street when measured in terms of FDI. US firms would create investments in China with new global mandates or relocations (also known as ‘offshoring’) and nothing would come back in return except imported products and a growing trade imbalance. This was both the narrative and the fact of the matter. Recently the tables began to turn – until a trade war postponed this positive shift.
 
Historical investment data shows the US has been making substantial greenfield project investments in China since 1992, which then grew significantly in 2005 and has continued unabated for 13 consecutive years (2009 being the sole exception due to recession). Work by the Rhodium Group shows Chinese investment into the US has historically been miniscule, until 2010, when FDI began to flow in the form of greenfield projects and acquisitions.
 
In fact, in the eight years between 2010 and 2017, Chinese FDI into the US totaled $135bn and exceeded US investments into China by 20%. It seemed that the tide had finally turned – until the US instigated a trade war with China, and Chinese FDI into the US dropped 82% in 2018.”
 

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