Foreign direct investment between the U.S. and China fell by 28 percent in 2017, according to a report released Tuesday, amid growing economic tensions between the two countries.
Private sector investments between the U.S. and China totaled $43.4 billion in 2017, according the National Committee on U.S.-China relations, an American nonprofit supporting closer economic ties between the countries.
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Cross-border investments between the countries dropped 28 percent from $60 billion in 2016, according to the report.
The nonprofit attributed the steep drop to an $17 billion decrease in Chinese investments in U.S. businesses. They fell from $46 billion in 2016 to $29 billion last year. U.S. investments in China totaled $14 billion in 2017, relatively unchanged from $13.8 billion in 2016.
Economic ties between the U.S. and China have soured since President Trump took office with the promise of cracking down on Beijing’s efforts to undercut American manufacturing. Trump has since approved roughly $50 billion in tariffs on China, sparking a potential trade war between the countries.
The report attributes the 2017 decline to Beijing tightening controls over investments abroad, delaying efforts to open its capital markets to foreigners and a series of Chinese acquisitions of U.S. companies blocked by the Treasury Department.
“China’s commitment to deepening economic reforms and market access for foreign firms remains an open question at this juncture,” the report reads. “This ambiguity and the limited space for open discussion about China’s reform direction present challenges for sustaining and further expanding foreign investment flows.”
The report also cited how the Trump administration “is redefining the US-China relationship by declaring China a ‘rival power’ and taking a more confrontative approach to trade and investment relations.”
The Trump administration has flexed its power to block Chinese acquisitions of U.S. tech firms through the Committee on Foreign Investment in the U.S. (CFIUS), a Treasury Department agency that vets such business deals for potential national security threats.
CFIUS has blocked several high profile deals over concerns that the Chinese government would obtain access to information and intellectual property that could undermine U.S. national security.
CFIUS blocked the sale of Lattice, an Oregon-based semiconductor and chip manufacturer, to a group of investors that included Chinese state-owned entities. The panel also killed the sale of MoneyGram, a money transfer firm, to a subsidiary of the Chinese company Alibaba.
The report estimates that more than $8 billion worth of deals were abandoned in 2017 due to “unresolvable CFIUS concerns.”