Not only are U.S. manufacturers and farmers feeling the devastating brunt of Donald Trump’s ongoing trade war with China — among other countries — now the New York Times reports that foreign investors no longer see America as a safe bet to park their money.
According to the report, “the once steady flow of Chinese cash into America, with Chinese investment plummeting by nearly 90 percent since President Trump took office.”
With the report stating, the drop-off “stems from tougher regulatory scrutiny in the United States and a less hospitable climate toward Chinese investment, as well Beijing’s tightened limits on foreign spending,” one analyst blamed the increasingly hostile trade relationship between the two countries.
“The fact that the foreign direct investment has fallen so sharply is symbolic of how badly the economic relationship between the United States and China has deteriorated,” explained Eswar Prasad, former head of the International Monetary Fund’s China division. “The U.S. doesn’t trust the Chinese, and China doesn’t trust the U.S.”
The Times reports that Chinese investments in the U.S. peaked at $46.5 billion in 2016 when Trump was elected, but have plummeted to $5.4 billion in 2018 — a stunning 88 percent decrease.
“A slowing economy and stricter capital controls in China have made it more difficult for Chinese investors to buy American, according to trade and mergers and acquisitions advisers,” the Times reports. “Mr. Trump’s penchant for imposing punishing tariffs on Chinese goods and an increasingly powerful regulatory group that is heavily scrutinizing foreign investment, particularly involving Chinese investors, have also spooked businesses in both countries.”
Additionally, Chinese investors are bailing on purchasing commercial and domestic real estate in the U.S. wary of future relations between the two countries.
“Research released recently by the National Association of Realtors found that purchases of homes in America by Chinese buyers declined by 56 percent to $13.4 billion in the year to March,” the Times reports with Lawrence Yun, chief economist for the association remarking, “The magnitude of the decline is quite striking, implying less confidence in owning a property in the U.S.”
“The decline in investment could hurt areas that are already economically disadvantaged and that have become dependent on Chinese cash. States like Michigan have increasingly wooed Chinese investment, resulting in new factories and jobs in a part of the country that has struggled to recover from the Great Recession,” the reports states, leading Craig Allen, the president of the U.S.-China Business Council, to say it will harshly impact areas considered Trump country.
“The not-so-welcome mat is out, and it is having a deleterious effect on relatively poorer areas in the United States that need jobs,” he said. “The Chinese hear from our state and local officials that they’re welcome,” Mr. Allen said. “What they’re hearing from federal officials is quite different.”
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