US-China investment flows slide to 9 y-low as bilateral tensions escalate

 Investment between the US 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 US operations

HONG KONG (Reuters) – 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 16.2% to $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 and the National Committee on U.S.-China Relations, an NGO. That’s a far cry from half-yearly totals of nearly $40 billion seen in 2016 and 2017.

Flows are unlikely to recover this year, regardless of the outcome of the U.S. presidential election, the report said, as “systemic concerns driving caution on Chinese investment in high technology, critical infrastructure and personal assets will not subside.” Citing national security risks posed by Chinese technology firms, U.S. President Donald Trump’s 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.