Huge Shift In Chinese Investment Away From North America

Since the beginning of 2018, China has dramatically reduced its outbound foreign direct investment away from North America and focused more on Europe. By the mid-point of this year, the value of announced Chinese merger and acquisitions in Europe reached $22 billion, nine times higher than in North America where it amounted to just $2.5 billion by comparison according to research by global law firm Baker McKenzie. When it comes to the value of completed Chinese investments between January and June in North America, the figure fell from $24 billion to $2 billion, a nosedive of 92 percent. Europe also saw Chinese investment fall but completed investments still amounted to a healthy $12 billion.

The shift is primarily due to policy changes in Beijing and Washington with both countries moving to protect their industries and reduce the outflow of capital. American regulators have also contributed to the reduction in Chinese cash with lawmakers working on reinforcing national security investment screenings and introducing stricter levels of scrutiny for outbound technology transfer. Of course, the escalating trade dispute between the U.S. and China hasn't helped the situation, prompting Beijing to forge closer ties with Europe. That resulted in European Commission President Jean-Claude Juncker and European Council President Donald Tusk holding meetings in China recently, after which both sides released a communique affirming their commitment to the multilateral trading system.