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Growing mistrust between the United States and China has slowed the previously stable money flow in America, as Chinese investments have fallen by almost 90% since Donald Trump took office.
The sharp decline, evident over a broad economic spectrum, is due to the strengthening of domestic regulatory controls in the country and the generally less favorable climate for Chinese investment, as well as Beijing's spending restrictions on foreign countries.
The recession is affecting several industries, including emerging Silicon Valley companies, the Manhattan real estate market, and state governments that have been trying for years to attract Chinese investment.
The decline in investment highlights the fact that today's two largest economies are turning away from years of increasing integration.
"The fact that the sharp contraction of foreign direct investment is a symbol of the deterioration of economic relations between the United States and China," said Eswar Prasad, former head of the Chinese division of the International Monetary Fund. If the United States does not trust the Chinese, the Chinese do not trust the United States either. "
Over the years, China's investments in the United States have accelerated, with funds invested in the technology, energy and agriculture sectors, which have stimulated the creation of new products. Jobs in the states of Michigan, South Carolina, Missouri, Texas and others. When the Chinese economy exploded, state governments and local governments sought to attract Chinese investment.
However, Trump's "cold war" led to a completely opposite course.
China's foreign direct investment in the United States fell to $ 5.4 billion in 2018, after peaking at $ 46.5 billion in 2016, a decline of 88%, according to figures released by the group. private economic research group Rhodium Group. Preliminary figures for the year up to April suggest investments by Chinese mainland companies, slightly higher than those of last year, for a total of $ 2.8 billion.
"In my investor interviews, I am certainly very worried about whether the US market is still open," said Rod Hunter, a lawyer at Baker & McKenzie, a foreign investment audit specialist. Chinese investors may panic. "
The slowdown in the Chinese economy and the imposition of stricter capital restrictions in Beijing have made it more difficult for Chinese investors to buy US goods, according to a number of acquisition and mergers advisers.
Tramb's tendency to impose punitive tariffs on Chinese products and increasingly stringent regulations tightening control over foreign investment, particularly by Chinese investors, has caused panic among employers in both countries.
Today, China, which has retaliated against US products and imposed tariffs on it, risks diverting its investments in the midst of retaliation for Trump's fierce economic campaign.
In addition, the United States' acceptance of Chinese investments has intensified as a result of the collapse of a large number of transactions under the strict control of the Foreign Investment Committee. United States. The committee, chaired by the Treasury Department, had expanded its powers in 2018 to block a wide range of transactions, including the purchase of a minority stake and investment in sensitive technology areas, such as telecommuting and computer science.
Shortly after the beginning of the year, the Chinese HNA group suffered a $ 41 million loss from a glbad and aluminum building in Manhattan after US regulators leased it. Forced to sell the property due to security concerns related to its proximity to Trump Tower.
In March, Chinese homeowners' regulators asked for the sale of the application to new homeowners, fearing that Trump's management could exploit Beijing's personal information recorded in the application to exert influence on US authorities.
These interventions came as a result of landmark cases in the early days of the Trump presidency, such as the rejection of Broadcom's offer to buy Qualcomm and the sale of MoneyGram to a unit of Chinese e-commerce giant Alibaba , Last year.
In some cases, panic among Chinese investors has returned to US companies. For example, in June, United Health purchased the new health care provider, Pechents Lake Me, after the committee announced that there was a risk to the security of allowing a Chinese company to access health data. The amount of the purchase has not been disclosed.
However, strict control complicates efforts by US industries to cooperate with Chinese investors and leads to rooting in specific industries. For example, the real estate sector, which has had a strong participation of Chinese investors over the past decade, has suffered a sharp decline due to the deterioration of relations between the two countries and the Chinese authorities' crackdown on foreign investment. .
A report released in May by Cushman & Wakefield revealed a "real estate fever" sweeping Chinese commercial investors in real estate in the United States. The report says that in 2018, Chinese buyers made 37 real estate acquisitions worth $ 2.3 billion, but sold commercial properties worth $ 3.1 billion. dollars. Difficult trade negotiations have made the Chinese feel uncomfortable, the report said.
In addition, the Chinese are less willing to own housing properties in the United States. A recent study by the National Association of Realtors showed that home purchases by Chinese in America fell by 56 percent to $ 13.4 billion in March.
"The magnitude of the decline is shocking and suggests a loss of confidence in owning a property in the United States," said Lawrence Yun, chief economist of the union.
Despite this decline, China remained the largest foreign buyer of real estate in America from April 2018 to March 2019.
– Middle East News
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