Photo: VCG

For years, Chinese companies invested billions of US dollars into all kinds of US assets, supporting American jobs and deepening economic ties between the two countries. However, nowadays, it is not so much.

In 2014, China's Anbang Insurance bought the Waldorf Astoria in New York for almost 1.95 billion US dollars. It heralded a buying frenzy of US properties by Chinese companies. Chinese direct investment in the US hit a peak of 45.6 billion US dollars in 2016. 

However, a lot of that direct investment has now vaporized. 

According to Rhodium Group, a leading independent research provider in the US, Chinese direct investment in the US in the first five months of this year totaled just 1.8 billion US dollars. That's a drop of more than 90 percent compared to the same period a year ago. 

The massive drop is due in part to the greater hurdles Chinese companies have to jump over to get a deal approved by the Committee on Foreign Investment in the United States (CFIUS) which vets international acquisitions of US companies for national security risks.

US President Donald Trump believes the US has gotten a raw deal in trade with China. CFIUS has increased its scrutiny of Chinese investments under his administration.

Rhodium Group says CFIUS and other US regulators have derailed eight pending deals worth more than two billion US dollars this year, including Ant Financial’s bid for MoneyGram. 

But it also says CFIUS isn't entirely to blame for the drop. Investment began falling sharply in 2017 after China imposed stricter restrictions on capital outflows. That year Beijing said outbound investment by domestic enterprises in such areas as real estate, hotels and entertainment should be prudent.

“It is still inordinately difficult to get money out of China to go into US direct investment other than what the Chinese government says is OK, and guess what, most of that is stuff involving the acquisition of technology that CFIUS doesn't want them to have,” said Dan Alpert, managing partner of the US investment bank Westwood Capital. 

Rhodium Group says the money from China isn't likely to start flowing back to the US anytime soon. The Trump administration is seeking more restrictions on Chinese investment, not less.