Beijing may be seeking to increase its leverage in trade talks with Washington by keeping Chinese companies from investing in the U.S., Bloomberg News reported, citing people familiar with the issue.
The National Development and Reform Commission (NDRC), China’s top economic planning agency, has, in recent weeks, told several of its regional branches to hold off on registration and approval of firms aiming to make American investments, the newswire said. The NDRC hasn’t explained the deferrals, Bloomberg added.
Chinese companies’ investment in the U.S. fell 5.2% in 2023, even as the country’s total outbound investment increased 8.7%, Bloomberg reported, citing Ministry of Commerce data. China has become less dependent on the U.S. market in recent years as trade ties have deteriorated, according to Yardeni Research.
“Trump 2.0 tariffs are incremental to legacy tariffs that have reshaped trade relations, reducing China’s exposure to the U.S.,” the firm said in its morning note. “So Trump 2.0’s 20% tariff on all made-in-China goods may have a smaller effect than widely expected, at least initially.”
The effects of recently increased tariffs on China’s economy have been muted so far, with the country’s fiscal and monetary stimulus and yuan depreciation likely to buffer the impact, Yardeni said, adding that China and Mexico may be more vulnerable to President Donald Trump’s tariffs.
There’s no indication that the deferred investment approvals will affect companies’ existing commitments abroad or Chinese purchases or holdings of foreign financial products, including U.S. Treasuries, according to the Bloomberg report.
The NDRC and Ministry of Commerce didn’t immediately reply to requests for comments, Bloomberg said. The agency has previously restricted some overseas investments on national security or capital-outflow grounds, the latter to ease pressure on the yuan.