The Future of China’s Investments in the US

By | December 29, 2016
foreign-direct-investments

Since 2009, China’s Foreign Direct Investments (FDI) into the US have been steadily growing, but this may all change with a Trump presidency.  In mid-2016, China was estimated to break records in FDI to the US, at around $20-$30 billion, mainly through the process of acquisitions and mergers. At the time, politics was the forefront of the main stage of the US, and everyone was watching how the election season would unfold. In the end, Donald Trump was declared the winner and elected by delegates as the US’s next commander in chief. A Donald Trump presidency has made many wonder and worry about the near future, as the new president-elect has, before even stepping into office, flaunted his lack of knowledge in foreign diplomacy and has already caused outrage around the world. Coupling this with his inexperience and the selection of his advisors, many wonder how it will affect different aspects of the US political and economic systems. One of the biggest blows would be a waning period of Chinese FDI into the US.

Quartz has written an excelent article about the recent trends of Chinese FDI into the US since 2006. In this chart, they show the trend of the past ten years in FDI between the two countries. In 2008, US investment into China peaked at around $21 billion, while investment from China into the US has been growing steadily from a few million in 2009 until around $16 million in 2015. In quarter 1 and 2 of 2016 alone, China has surpassed 2016 numbers. 2016 will have been the most Chinese firms have invested in China, ever. But is this sustainable? How will a Trump presidency effect such a strong economic relationship?

The economic cooperation between the US and China is vital for the world economy and the allocation of resources to the world. The two nations sit at near-opposite ends of the political spectrum, despite having many descriptors in common. The peaceful and prosperous future of the two countries is dependent on the cooperation in the coming years. Mutual understanding is important when handling intercultural affairs. This is what makes a Trump presidency so nerve-racking. Trump, before even being sworn in as president, has represented the US in a negative way with China, specifically in accepting a telephone call of congratulation from Taiwan leaders. This, of course, disrupts the one-China policy the two have agreed upon. This farce looks to be one of many of the next 4 years which will most definitely affect the relationship of the US to China, at possibly one of the most crucial times economically and politically in human history.

The hope for the future is an expansion of both Chinese and US economies, a strengthening of mutual understanding, and new cross-border cooperation between China and the US. Although roadblocks seem to have been preemptively set, hopefully the rational pieces of each country’s leadership understand the implication for a less than amicable relationship between China and the US and what that would mean for the world. Ultimately, politics must match the goals of the world’s economy and the prosperity of its people.

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