View all newsletters
Receive our newsletter - data, insights and analysis delivered to you
  1. Analysis
22 February, 2022updated 03 Mar 2022 07:18

How has Covid-19 impacted the FDI relationship between China and the US?

Covid-19 caused FDI levels to plummet in 2020 before a recovery in 2021, but did the relationship between China and the US follow this pattern?

By Glenn Barklie

In 2020, China received 399 greenfield foreign direct investment (FDI) projects, while there were 1,696 projects recorded going into the US, according to GlobalData’s FDI Projects Database.

The number of projects into China fell sharply, decreasing by 54% from 2019. During the same period, the number of greenfield FDI projects into the US also fell, but by a smaller proportion (11%).

Chinese outbound FDI into the US

China-based companies created 68 projects in the US in 2020. This represented a 6.3% increase compared with 2019.

Nominally, China-based companies primarily invested in software and IT services, industrial machinery, equipment and tools, and rubber sectors in the US. Combined, these three sectors accounted for 47% of total Chinese outbound FDI projects destined for the US in 2020.

Top China-based investors in the US included ByteDance, Haier Group and Fuyao Group. Combined, these companies accounted for 15% of total project flows in 2019–20.

In terms of total Chinese outbound FDI projects, the US ranked as the second-largest recipient country in 2020. It was the leading recipient in 2019.

China-based companies primarily established operations in California. In fact, 24% of projects into the US by Chinese companies were located there in 2020. Texas and South Carolina were the next most popular subnational destinations.

US outbound FDI into China

US-based companies created 97 projects in China in 2020. The number of projects fell by 53.4% compared with 2019.

Tourism, pharmaceuticals and food were the top sectors in which US companies were investing in China. Combined, these three sectors accounted for 45% of total US outbound FDI projects destined for China in 2020.

In terms of sector market share, China attracted a larger market share of US outbound FDI in construction materials. China accounted for 20% of total US construction materials outbound FDI projects. China also accounted for significant shares in the pharmaceuticals (15%) and beverages (15%) sectors.

Top US-based investors in China included Hilton, Marriott International and Hyatt Hotels. Combined, these companies accounted for 19% of the total number of US-headquartered projects established in China in 2019–20.

China ranked as the eighth-largest recipient country of US outbound FDI in 2020. It was the fourth-largest recipient in 2019.

US-based companies primarily established operations in Shanghai province. In 2020, 24% of all US outbound projects destined for China were created in Shanghai province. Jiangsu and Guangdong were the next most popular subnational destinations.

Topics in this article:
NEWSLETTER Sign up Tick the boxes of the newsletters you would like to receive. Data, analysis and deep insights on foreign direct investment delivered to you
I consent to GlobalData UK Limited collecting my details provided via this form in accordance with the Privacy Policy
SUBSCRIBED

THANK YOU

Thank you for subscribing to Investment Monitor