Chinese investment into U.S. slumps in 2017 on policy changes: report

A U.S. flag is seen during a welcoming ceremony in Beijing, China, November 9, 2017. REUTERS/Thomas Peter

SHANGHAI (Reuters) - Chinese investment in the United States fell more than a third last year to $29 billion from a record $46 billion in 2016, the first major correction in a decade, a report by the Rhodium Group and the National Committee on U.S.-China Relations showed.

The main culprit was government policy on both sides of the Pacific, namely Beijing’s efforts to crack down on outbound capital flows and Washington’s intensified screening of Chinese acquisitions in America, said the report issued on Tuesday.

The report by the New York-based consultancy and the non-profit business lobby comes at a time of heightened friction between China and the United States over trade, and warns that “policy bellicosity especially from Washington” was casting a darker shadow over the economic relationship.

“This more problematic political environment is likely not just transient but rather the new normal. Changing policy attitudes on both sides are deep-seated, not just tactical ploys,” said the report.

In 2017, the value of announced foreign direct investment deals from China into the United States plummeted by more than 90 percent from the year before, while much of the money that continued to flow into America was carryover from 2016 deals, the report said.

Average deal values dropped to $215 million from $356 million, it said.

It said planned greenfield projects were delayed, fewer jobs were added to Chinese payrolls in America compared to previous years and some Chinese companies even began looking for exits.

The “policy attitudes” behind the falling numbers were “unlikely to reverse fully anytime soon, suggesting that lower levels of investment will persist in the near term”, it said.

American investment in China, meanwhile, was basically flat at $14 billion last year from $13.8 billion the year before, it said.

Reporting by John Ruwitch; Editing by Jacqueline Wong