Finance

China-US investment slumps by 16% amid New Cold War tensions

Report shows that the world’s two leading economies are moving towards ‘decoupling’

New Cold War tension between Beijing and Washington has seen investment between the United States and China plunge to a nearly decade low.

In the first half of 2020, direct investment by companies and venture capital flows fell by nearly 16.2% to US$10.9 billion, a report co-authored by the Rhodium Group, a consultancy, highlighted.

To put that into context, close to $40 billion was invested in 2016 and 2017.

“At a time of rising discomfort with US-China technology integration, numerous other companies – both Chinese firms operating in the US and US firms with a presence in China – may be forced to divest,” the report stated.

While the Covid-19 pandemic has had an impact, the main driver of the slump has been the tech and trade conflict between the world’s two largest economies.

It’s human rights, it’s economic reform, it’s the South China Sea, it’s the Hong Kong National Security Law, it is Taiwan … [there’s] a long, long list of issues where there are very high tensions

Stephen Orlins of the National Committee on US-China Relations

Chinese companies have been hit by an array of sanctions. Huawei is on a Washington trade blacklist along with a group of other firms, including ZTE.

TikTok, which is in talks with the Oracle Corporation, has also been ordered to cut links from owner ByteDance if it wants to be able to operate in the US because of national security issues.

“Right now we’re moving towards decoupling,” Stephen Orlins, of the report’s co-authors the National Committee on US-China Relations, said.

“It’s human rights, it’s economic reform, it’s the South China Sea, it’s the Hong Kong National Security Law, it is Taiwan … [there’s] a long, long list of issues where there are very high tensions,” Orlins, who is is president of the US non-profit organization, added.

Similar Posts