According to a research report, investment flows between the United States and China touched its nine-year nadir during the first half of 2020 due to increasing Chinese belligerence-induced tensions which could see more Chinese companies come under U.S. pressure to divest their U.S. operations.
Investments in the form of direct investments by companies as well as venture capital flows between the two economic giants, fell by 16.2% to $10.9 billion during the January to June period; during this timeframe, economic ties were also impacted by the coronavirus pandemic which emerged from Wuhan China, according to figures from consultancy Rhodium Group.
The fall comes into focus when compared to the nearly $40 billion that was seen in 2016 and 2017.
U.S. President Donald Trump has cited systemic theft by China, among other national security risks posed by Chinese companies and has slapped punitive sanctions to hobble them.
As part of an broader effort to mitigate risks related to Chinese forced transfer of technology, compliance to intellectual property rights, among others, Washington has placed China’s Huawei Technologies Co Ltd, a relative newcomer in the telecom industry which has seen a sharp rise in global sales, on a trade blacklist, and has threatened similar action on Semiconductor Manufacturing International Corp.
“At a time of rising discomfort with US-China technology integration numerous other companies – both Chinese firms operating in the U.S. and U.S. firms with a presence in China may be forced to divest,” reads the report.
It goes on to state, U.S. policy towards predatory behavior of Chinese companies to collect huge data tracts from U.S. consumers is likely to lead to the creation of U.S. policies which will make it more harder for Chinese tech companies to operate in the U.S.; China is also likely to mirror the move.
Intent on deepening its links with the U.S., so as to be able to continue, if not increase, its ubiquitous harvesting of U.S. consumer data, investments by Chinese companies in the U.S. rose by 38% to $4.7 billion, while investment by U.S. firms in China tumbled by 31% to $4.1 billion.