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Chinese money in the US is drying up when the trade war continues



The sky of Manhattan, watched by Weehawken, NJ, May 2, 2019. Investment chill can hurt the US real estate market particularly hard. A May report noted "fierce disarmament activity" among Chinese real estate investors in the United States. The growing mistrust between the United States and China has slowed the steady flow of Chinese money in America after Chinese investment fell nearly 90 percent since President Donald Trump took office.

The ban that is felt throughout the economy stems from tighter regulatory control in the United States and less welcoming climate to Chinese investment, as well as from Beijing's stricter external cost constraints.

This concerns a number of industries, including Silicon Valley startups, Manhattan real estate market, and governments of countries that have spent years engaging in Chinese investment, highlighting how the world's two largest economies begin to separate after years of increasing integration.

has fallen so sharply, symbolizing how bad economic relations between the US and China are, "said Esavar Prasad, former head of the International Monetary Fund in China. "The US does not believe the Chinese and China does not believe the United States"

For years, Chinese investments in the United States have accelerated, with money flowing into cars, technology, energy and agriculture, and fueling new jobs in Michigan, South Carolina, Missouri, Texas and other states. As the Chinese economy flourishes, state and local authorities, along with US companies, are looking at some of these Chinese funds. But Trump's economic cold war has helped overcome this trend.

Chinese foreign direct investment in the US fell to $ 5.4 billion in 201

8 from a peak of $ 46.5 billion in 2016, a decline of 88%, according to data from the Rhodium Group, an economic research firm. Preliminary data for April this year, which represent investments by mainland Chinese companies, suggest only modest growth since last year, with deals amounting to $ 2.8 billion. "Of course, in talks with investors, it is very worrying whether the US Market is still open," said Rod Hunter, a lawyer at Baker McKenzie, who specializes in foreign investment reviews. "You have a potentially chilling effect for Chinese investors."

Merging forces seems to be in play. The economic slowdown and tighter capital controls in China made it difficult for Chinese investors to buy American, according to trade and merger and acquisition consultants. Trump's tendency to impose punitive tariffs on Chinese commodities, and an increasingly powerful regulatory group that strongly controls foreign investment, especially with the involvement of Chinese investors, has also frightened the business in both countries.

China responding to US goods at its own tariffs It could also rule out the investment crane as a punishment for Trump's economic repression.

Concerns about America's perception of Chinese investment are compounded by traffic jams, which have collapsed under the stern control of the US Foreign Investment Commission. The Group, which is headed by the Treasury, gained more power in 2018, allowing it to block a wider range of transactions, including minority stakes, and investing in sensitive technologies such as telecommunications and computer technology.

Shortly after the new year, the Chinese HNA Group lost $ 41 million in glass and aluminum Manhattan after the US regulators forced her to sell the property due to its proximity to the Trump Tower just a few blocks away.

The owners of gay dating applications, known as Grindr, were ordered by regulators to find a buyer for the company. The Trump administration feared that Beijing could use personal information as a leverage for US officials. Alibaba last year. An agreement including Lattice Semiconductor and an investment company with reported ties to the Chinese government was also rejected.

In some cases, the cool has been beneficial to US companies. In June, UnitedHealth purchased PatientsLikeMe, a bootstrapping healthcare technology, after the committee said it was a security risk to allow the Chinese company owner to access health data. The amount of the purchase was not disclosed. But enhanced control also complicates the efforts of US industries to join forces with Chinese investors and lead to cuts in certain sectors. The real estate sector, which has been backed by Chinese investors over the past decade, has sharply declined as relations are worsening and Chinese officials are restricting foreign investment in real estate.

A report by Cushman & Wakefield's mother remarked, "Madness of Disposal," among Chinese real estate investors in the United States. In 2018, 37 Chinese buyers bought 2,3 billion dollars, but 3.1 billion dollars of commercial real estate were sold. The report says that HNA treatment and difficult commercial talks have made Chinese investors feel undesirable.

Chinese investors also show less appetite for residential property in the United States. Research recently published by the National Real Estate Association found that purchases of US homes by Chinese buyers fell 56 percent to $ 13.4 billion in the year to March.

Lawrence Yun, Chief Economist in the Real Estate Brokers Group.

Despite the downturn, China is still the largest foreign property buyer in the US from April 2018 to March 2019.

The financial sector, including banks and private equity, also feels the effects. The fund that Goldman Sachs started with China Investment Corp. in 2017, is closely scrutinized by the Ministry of Finance, according to two employees of the Ministry of Finance. The Fund, the Sino-American Industrial Cooperation Partnership, was set up to invest in US manufacturing and healthcare companies and then to build business relations in China.

The spokeswoman of Goldman Sachs said the bank is in compliance with all state regulations. 19659003] John Cabeallo, a Washington-based lawyer specializing in cross-border transactions, said US private equity funds are now less likely to unite with foreign funds when making acquisitions, as this may raise the flag . at the moment there is a lot of concern in the fund world, "Cabeallo said. "The funds still want to take Chinese money, but they are much more cautious in the way they do it."

Even if both sides reach a trade agreement, it is expected that the cool Chinese investments will continue. The administration is introducing new barriers to investment, including control over the types of US technology that can be sold abroad, and placing Chinese companies like Huawei on a black list.

The United States Foreign Investment Committee, which previously only had the power to review transactions where a foreign investor took control of US businesses, is now reviewing a wider range of deals, including joint ventures and smaller investments by foreigners in US businesses that make critical technology.

surely a certain degree of hesitation in China when investing in the United States, "said Amin Mir, former assistant secretary for investment security at the Treasury, who recently joined Freshfields Bruckhaus Deringer at the law firm. "It is hard to question the fact that these rules clearly had some impact on Chinese investment."

Poorer Chinese investments are unlikely to spoil the US economy, as it is a small fraction of those in the UK, Canada , Japan and Germany. China continues to be the largest buyer of American treasures; However, according to the latest data from the Ministry of Finance, in recent years its holdings have fallen to $ 1.1 trillion. Countries like Michigan are increasingly attracting Chinese investment, leading to new factories and jobs in part of the country struggling to recover from the Great Recession.

Craig Allen, president of the American-Chinese Business Council, said China's investment loss would be felt mostly in rural countries where Chinese investors bought factories and revitalized the struggling business.

"The Chinese hear from our state and local authorities that they are welcome," Alan said. "What they hear from the federal authorities is totally different."

In the county of Ballard, Kentucky, local authorities are grateful that Chinese Shanying International Holdings acquired a closed paper mill last year. In May, the factory opened again and filled many of the 300 lost jobs. trade pressures have hindered manufacturing investments in cities like hers.

"Considering our national conversation, I expected to have some hesitation," said Harlis. "But I have not heard that nobody in our community is negative about this opportunity."

2019 New York Times News Service


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