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China’s outbound FDI in the US may correct in the 2H

CHINESE foreign direct investment into the US will fall this year under tightening inspection while the US investment to China will remain robust led by technology and consumer goods sectors, a report said today.

The first half remained strong due to completion of deals made in 2016, but cooler activities will be expected in the second half, said a report by Rhodium Group and the National Committee of US-China Relations

The decline marks a correction from a surge of overseas investment last year as China made US$46 billion investment to the US in 2016, three times that in 2015, the report said.

On the other hand, foreign direct investment from the US to China last year was a quarter of the China-US investment but still a record.

The US investment to China will likely hold up well as the main sectors are in line with China’s economic upgrade and restructuring, said Thilo Hanemann, director of Rhodium Group.

He said even though both the US and China are tightening scrutiny on national security, bilateral investment still has huge room of increase seeing the number of projects in the pipeline.

Information communications technology was the largest sector for US investment into China last year, followed by consumer products and services, the report said.

Real estate and hospitality was the favorite sectors for Chinese investors last year and triggered regulatory tightening late last year to prevent irrational investment.

Restrictions were placed on excessively large deals and projects irrelevant to a company's core business to prevent risks amid a boom of overseas M&A and fast capital outflow from China.

Hanemann said further opening up of the China market could benefit both countries and help balance the investment flow between US and China.


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