COVID-19

U.S.-China long-term investment falls to 9-year low amid pandemic, protectionism

Scott Tong Sep 17, 2020
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The Trump administration's tariffs against Chinese imports have not succeeded, a report shows. Mario Tama/Getty Images
COVID-19

U.S.-China long-term investment falls to 9-year low amid pandemic, protectionism

Scott Tong Sep 17, 2020
The Trump administration's tariffs against Chinese imports have not succeeded, a report shows. Mario Tama/Getty Images
HTML EMBED:
COPY

Factory builds and other long-term investments between China and the United States declined to $10.9 billion in the first half of 2020, the lowest level in nine years, according to a report from the Rhodium Group economic research firm and the National Committee on U.S.-China Relations, which advocates for bilateral ties.

One key finding from the authors: The Trump administration’s tariffs against Chinese imports, designed to make manufacturing more expensive on the mainland and bring factory jobs back to the United States, has not succeeded.

“The tariffs failed,” Stephen Orlins, president of the U.S.-China committee, said. “They succeeded in some relocation of production from China to other lower tariff countries: Vietnam, Malaysia, Indonesia, Sri Lanka. But it did not bring manufacturing back to the U.S.”

Chinese investment in the U.S. also fell because of the pandemic recession, as well as American protectionist policies against Chinese firms including TikTok, the report said. Those measures have pressured Beijing to retaliate against foreign companies and investors in China, said Rhodium Group partner Thilo Hanemann.

“Foreign companies may be hesitant to further deepen their footprint inside of China,” Hanemann said. “They might diversify away from their Chinese manufacturing bases over the next couple of years.”

Political frictions may apply to strategically important sectors, like semiconductors, but Hanemann expects U.S.-China investment to continue in other areas, including KFC’s inroads into the mainland market.

Continued investments matter in the big picture, he added.

“We know from history that two-way trade and investment and integration decreases the risk of conflict,” Hanemann said. “If China really is isolated as a country, one of the biggest risks for all of us will be higher risk of a serious military confrontation.”

COVID-19 Economy FAQs

How are Americans feeling about their finances?

Nearly half of all Americans would have trouble paying for an unexpected $250 bill and a third of Americans have less income than before the pandemic, according to the latest results of our Marketplace-Edison Poll. Also, 6 in 10 Americans think that race has at least some impact on an individual’s long-term financial situation, but Black respondents are much more likely to think that race has a big impact on a person’s long-term financial situation than white or Hispanic/Latinx respondents.

Find the rest of the poll results here, which cover how Americans have been faring financially about six months into the pandemic, race and equity within the workplace and some of the key issues Trump and Biden supporters are concerned about.

Are people still waiting for unemployment payments?

Yes. There is no way to know exactly how many people have been waiting for months and are still not getting unemployment, because states do not have a good system in place for tracking that kind of data, according to Andrew Stettner of The Century Foundation. But by his own calculations, only about 60% of people who have applied for benefits are currently receiving them. That means there are millions still waiting. Read more here on what they are doing about it.

What’s going to happen to retailers, especially with the holiday shopping season approaching?

A report out Tuesday from the accounting consultancy BDO USA said 29 big retailers filed for bankruptcy protection through August. And if bankruptcies continue at that pace, the number could rival the bankruptcies of 2010, after the Great Recession. For retailers, the last three months of this year will be even more critical than usual for their survival as they look for some hope around the holidays.

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