US-China investment at nine-year low amid COVID-19 and bilateral tensions

The two-way capital flow between the United States and China has dropped to a nine-year low amid the growing tensions and economic fallout from the COVID-19 pandemic. According to figures from Rhodium Group and the National Committee on US-China Relations, combined direct and venture capital investment between the two countries totaled $10.9 billion in the first half of 2020, lowest since the second half of 2011. 

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The Chinese investment in the United States increased a bit due to just one deal between Tencent and Universal Music Group. The Chinese FDI in the US increased to $4.7 billion in the first half of 2020 from $3.4 billion during the same period last year. Tencent purchased a minority stake in the Universal Music group for $3.4 billion, which is a major contributor to the Chinese FDI in the US. 

Meanwhile, US FDI in China declined as the dual impact of the pandemic and bilateral tensions hit. US companies slashed new investment in Communist country relations between Washington and Beijing soured. 

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US action on TikTok & more

Chinese venture investment remained stable but total investment dropped to a six-year low, while US venture investment in China hit its lowest level in four years. Growing bilateral tensions are pressuring firms to unravel existing investments. The order by US President Trump for Bytedance to sell social media app TikTok is the latest example of a series of high-profile asset divestitures forced by US regulators. 

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Donald Trump has asked TikTok to divest and leave the country accusing it of selling personal data of millions of Americans to the Chinese Communist Party, an allegation the company has dismissed. The Trump administration has also attacked several other Chinese tech companies, including Huawei and WeChat. With the upcoming November presidential poll, things between the United States and China is unlikely to get resolved as Trump's repeated attacks on Beijing are only increasing day-by-day.

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