While China has a huge national manufacturing industry, a significant percentage of its economic growth is based on foreign investments. However, recent reports indicate that Chinese investments concerning commercial properties in the US are declining following several restrictions meant to limit the amount of capital that leaves mainland China, as well as due to the recent trade war between the two international actors.
Consequently, statistics indicate that only $1.4 billion was invested in US real estate by Chinese investors this year. This represents a 76% fall when compared to the values recorded over the last couple of years, as indicated by Real Capital Analytics. Similarly, Hong Kong-based real estate investments also fell sharply.
According to the senior VP for Real Capital Analytics, Chinese investors are now focused on net selling, rather than carrying out speculative outbound investments, especially so in the US.
On the other hand, other countries have reported Chinese investors pouring more capital into civil and real estate projects. Nations that have reported an increase in Chinese investment rates include South Korea, Germany, and Turkey.
From a geopolitical and economic standpoint, China has closer relations with these nations, as compared to the US. It only makes sense that Chinese investors focus on regions where bilateral political and economic stability exists.
An end to the trade war, alongside more relaxed national capital controls, would likely encourage an increase in the amount of capital invested by Chinese nationals on US soil. Currently, there is little to no available data highlighting the amount of money being invested by US investors in Chinese projects.
Analysts believe that because of the trade war, both international actors are losing out on significant market opportunities. Nevertheless, both nations are strong enough to sustain themselves without capital from one another.