Finance

Chinese investment in the U.S. isn’t likely to pick up under Trump

Published

4 months ago

January 20, 2025

Cho Tak Wong, the chairman of auto glass giant Fuyao Glass, bought the vacant General Motors manufacturing plant in Moraine, Ohio in 2014.

The Washington Post | The Washington Post | Getty Images

Chinese investments in the U.S. have dramatically declined since Donald Trump’s first term. This trend is unlikely to reverse as Trump returns to the White House, analysts said.

Trump has threatened additional tariffs on Chinese goods soon after his inauguration on Monday, building on an increasingly tough U.S. stance on Beijing.

“That’s probably the last thing on Trump’s mind, is trying to incentivize [Chinese companies] to invest here,” said Rafiq Dossani, an economist at U.S.-based think tank RAND.

“There’s an ideological mismatch. All the rhetoric is, keep China out of the U.S., let their products come in, which are low-end,” he said in an interview earlier this month. But other than that, “don’t, don’t let them come in.”

In the last several weeks, Emirati property giant Damac has pledged $20 billion to build data centers in the U.S., while SoftBank CEO Masayoshi Son announced a $100 billion investment for artificial intelligence development in the U.S. over Trump’s four-year term.

Trump's stance on China remains unclear, says US ambassador

Chinese investment deals in the U.S. have slowed drastically, according to the latest American Enterprise Institute data. Just $860 million flowed into the U.S. in the first six months of 2024, following $1.66 billion in 2023. That’s down sharply from $46.86 billion in 2017, when Trump began his first term.

At the peak, Chinese companies had made high-profile U.S. acquisitions, such as buying the Waldorf Astoria hotel in New York. But regulators on both sides have stemmed the flow.

“Chinese investment in the U.S. has slowed down dramatically since Beijing tightened control over capital outflows in 2017, followed by a series of regulatory policies in the U.S. aimed at excluding investments in certain sectors,” Danielle Goh, senior research analyst at Rhodium Group, said in an email.

In the “foreseeable future,” she doesn’t expect Chinese investments in the U.S. will recover the peak levels seen during the 2016 to 2017 period. Goh pointed out that instead of acquisitions, Chinese companies have turned more to small joint ventures with U.S. companies or greenfield investments, in which business are built from scratch.

For example, Chinese battery manufacturing company EVE Energy is the technology partner with a 10% stake in a joint venture with U.S. engine company Cummins’ Accelera division, Daimler Truck and PACCAR. The companies announced in June 2024 they were kicking off plans for a battery factory in Mississippi that would begin production in 2027 and create more than 2,000 jobs.

Since the Covid-19 pandemic, the U.S.-China Chamber of Commerce has mostly helped Chinese e-commerce companies set up local offices, rather than establish manufacturing businesses, the nonprofit’s president Siva Yam told CNBC.

“Most of those investment nowadays tend to be a little bit smaller, so they are not on the radar, easier to approve,” he said, referring to regulators in both the U.S. and China. But he remained uncertain about whether Chinese companies could use investments to offset the impact of tariffs.

Individual U.S. states have grown increasingly wary of Chinese investment. Last spring, Politico reported that more than 20 states were passing new restrictions on land purchases by Chinese citizens and companies, or updating existing rules.

Chinese hackers in December targeted a government office that reviews foreign investment in the United States, CNN reported, citing U.S. officials. This was part of a wider breach of the Treasury Department, which declined a CNBC request for comment.

Deal-making strategy?

Trump has indicated tariffs may be used to coerce Chinese investment in the U.S.

In his speech accepting the Republican nomination, he said, “I will bring auto jobs back to our country, through the proper use of taxes, tariffs, and incentives, and will not allow massive auto manufacturing plants to be built in Mexico, China, or other countries.”

“The way they will sell their product in America is to BUILD it in America, and ONLY in America. This will create massive jobs and wealth for our country,” he said, according to an NBC News transcript.

Chinese battery giant CATL reportedly said in November it would build a U.S. plant if Trump allowed it. The company did not immediately respond to a request for comment.

Advocacy group Center for American Progress pointed out in December that during his first term, Trump cancelled restrictions on Chinese telecommunications company ZTE — just days after the Chinese government and Chinese banks invested $1 billion in a Trump Organization-affiliated theme park in Indonesia.

The Trump transition team did not immediately respond to a request for comment on the ZTE deal or the opportunities for Chinese companies to invest in the U.S.

Even if Trump welcomed more Chinese investment, or coerced it through tariffs, large investments are long-term processes that won’t happen overnight, pointed out Derek Scissors, senior fellow at the American Enterprise Institute.

Then there’s the unpredictability of the president-elect’s policies.

“Trump saying the U.S. is open to Chinese companies in 2025 is no guarantee [even] for 2029,” he said.

Finance

China’s April retail sales growth of 5.1% misses expectations as consumption remains a worry

Published

8 hours ago

May 18, 2025

Business Finance News

Citizens are shopping at a supermarket in Nanjing, East China’s Jiangsu province, on March 9, 2024.

Costfoto | Nurphoto | Getty Images

China’s retail sales growth slowed in April, data from the National Bureau of Statistics showed Monday, signaling that consumption remains a worry for the world’s second-largest economy.

Retail sales rose 5.1% from a year earlier in April, missing analysts’ estimates of 5.5% growth, according to a Reuters poll. Sales had grown by 5.9% in the previous month.

Industrial output grew 6.1% year on year in April, stronger than analysts’ expectations for a 5.5% rise, while slowing down from the 7.7% jump in March.

Fixed-asset investment for the first four months this year, which includes property and infrastructure investment, expanded 4.0%, slightly lower than analysts’ expectations for a 4.2% growth in a Reuters poll.

The drag from real estate worsened within fixed asset investment, falling 10.3% for the year as of April.

The urban survey-based unemployment rate in April eased to 5.1% from 5.2% in March.

The data came against the backdrop of trade tensions between China and the U.S.

U.S. President Donald Trump placed tariffs of 145% on imports from China that came into effect in April. Beijing retaliated with tariffs in kind, with 125% levies on American imports.

Trade-war fears have receded after a meeting of U.S. and Chinese trade representatives in Switzerland earlier this month led to a lower set of levies between the world’s two largest economies.

Beijing and Washington agreed to roll back most of the tariffs imposed on each other’s goods for 90 days, allowing some room for further negotiation to reach a more lasting deal.

That prompted a slew of global investment banks to raise their forecasts for China’s economic growth this year while paring back expectations for more proactive stimulus as Beijing strives to reach its growth target of around 5%.

This is breaking news. Please check back later for updates.

Finance

Scott Bessent calls Moody’s a ‘lagging indicator’ after U.S. credit downgrade

Published

20 hours ago

May 18, 2025

Business Finance News

Treasury Secretary Scott Bessent said in an interview on NBC News’ “Meet the Press” that Moody’s Ratings were a “lagging indicator” after the group downgraded the U.S.’ credit rating by a notch from the highest level.

“I think that Moody’s is a lagging indicator,” Bessent said Sunday. “I think that’s what everyone thinks of credit agencies.”

Moody’s said last week that the downgrade from Aaa to Aa1 “reflects the increase over more than a decade in government debt and interest payment ratios to levels that are significantly higher than similarly rated sovereigns.”

The treasury secretary asserted that the downgrade was related to the Biden administration’s spending policies, which that administration had touted as investments in priorities, including combatting climate change and increasing health care coverage.

“Just like Sean Duffy said with our air traffic control system, we didn’t get here in the past 100 days,” Bessent continued, referring to the transportation secretary. “It’s the Biden administration and the spending that we have seen over the past four years.”

The U.S. has $36.22 trillion in national debt, according to the Treasury Department. It began growing steadily in the 1980s and continued increasing during both President Donald Trump’s first term and former President Joe Biden’s administration.

Bessent also told moderator Kristen Welker that he spoke on the phone with the CEO of Walmart, Doug McMillon, who the treasury secretary said told him the retail giant would “eat some of the tariffs, just as they did in ’18, ’19 and ’20.”

Walmart CFO John David Rainey previously told CNBC that Walmart would absorb some higher costs related to tariffs. The CFO had also told CNBC separately that he was “concerned” consumers would “start seeing higher prices,” pointing to tariffs.

Trump said in a post to Truth Social last week that Walmart should “eat the tariffs.” Walmart responded, saying the company has “always worked to keep our prices as low as possible and we won’t stop.”

“We’ll keep prices as low as we can for as long as we can given the reality of small retail margins,” the statement continued.

When asked about his conversation, Bessent denied he applied any pressure on Walmart to “eat the tariffs,” noting that he and the CEO “have a very good relationship.”

“I just wanted to hear it from him, rather than second-, third-hand from the press,” Bessent said.

McMillon had said on Walmart’s earnings call that tariffs have put pressure on prices. Bessent argued that companies “have to give the worst case scenario” on the calls.

The White House has said that countries are approaching the administration to negotiate over tariffs. The administration has also announced trade agreements with the United Kingdom and China.

Bessent said on Sunday that he thinks countries that do not negotiate in good faith would see duties return to the rates announced the day the administration unveiled across-the-board tariffs.

“The negotiating leverage that President Trump is talking about here is if you don’t want to negotiate, then it will spring back to the April 2 level,” Bessent said.

Bessent was also asked about Trump saying the administration would accept a luxury jet from Qatar to be used as Air Force One, infuriating Democrats and drawing criticism from some Republicans as well.

The treasury secretary called questions about the $400 million gift an “off ramp for many in the media not to acknowledge what an incredible trip this was,” referring to investment commitments the president received during his trip last week to Saudi Arabia, Qatar and the United Arab Emirates.

“If we go back to your initial question on the Moody’s downgrade, who cares? Qatar doesn’t. Saudi doesn’t. UAE doesn’t,” he said. “They’re all pushing money in.”

When asked for his response to those who argue that the jet sends a message that countries can curry favor with the U.S. by sending gifts, Bessent said that “the gifts are to the American people,” pointing to investment agreements that were unveiled during Trump’s Middle East trip.

Sen. Chris Murphy, D-Conn., criticized Bessent’s comments about the credit downgrade, saying in a separate interview on “Meet the Press.”

“I heard the treasury secretary say that, ‘Who cares about the downgrading of our credit rating from Moody’s?’ That is a big deal,” Murphy said.

“That means that we are likely headed for a recession. That probably means higher interest rates for anybody out there who is trying to start a business or to buy a home,” he continued. “These guys are running the economy recklessly because all they care about is the health of the Mar-a-Lago billionaire class.”