China's North American Investment Plummets Amidst US Hurdles and Uncertainty
In the waning months of 2024, Chinese investment in North America witnessed a sharp decline, falling below pandemic lows. This slump stems from obstacles in the US, including stringent trade policies and heightened restrictions on Chinese investments. Additionally, a wait-and-see approach by firms in anticipation of the US presidential election may have further exacerbated the downturn.
According to research from US-based Rhodium Group, new investments into Canada, Mexico, and the US plummeted by over 90% in the final quarter of 2024. Announced investments totaled a mere $191 million, a fraction of the $16.5 billion invested in the same period in 2023.
Tariffs, restrictions on exports, and limited investment opportunities have made the US a less welcoming environment for Chinese companies. A prominent example is the ban on Chinese electric vehicle technology, which has curtailed investments in the automotive sector.
Globally, Chinese outbound investments remained concentrated in basic materials, metals, and minerals. Despite an overall 10% decline in newly announced investments, completed projects reached a record high of $58 billion in 2024. The energy sector also saw increased spending, particularly in renewable equipment and power generation.
Greenfield investments dominated the landscape, with substantial investments in new oil refineries, mines, and battery factories.
Official Chinese data suggests that outbound spending is rapidly growing, with a reported rise to $144 billion in 2024. However, transaction-level data compiled by Rhodium Group casts doubt on the accuracy of these figures. The discrepancy between firm-level data and official statistics implies that a significant portion of China's outward foreign direct investment may not represent genuine global economic activity.