China's North American Investment Slumps Due to US Hurdles and Election Uncertainty
In the final quarter of 2024, China's investment in Canada, Mexico, and the US plummeted to $191 million, a 90% decline compared to the same period in 2023. This decline was primarily driven by challenges faced by Chinese companies in the US, including tariffs, investment restrictions, and a hostile environment for foreign investors.
The US's protectionist policies have discouraged Chinese companies from investing in the country. For example, the ban on Chinese electric vehicle technology has led to a shift towards capital-light investment approaches, with companies like Contemporary Amperex Technology Co Ltd. licensing their technology to US manufacturers instead of investing in their own production facilities.
Globally, Chinese outbound investment remains concentrated in basic materials, metals, and minerals projects. Greenfield investments in new projects, such as oil refineries, mines, and battery factories, were dominant in 2024.
Despite the decline in new investment announcements, completed projects in North America reached $58 billion, the highest total since 2020. The data also shows a surge in renewable energy investments, with Chinese companies leading the global manufacturing of wind turbines and solar panels.
China's official data indicates a rapid increase in outbound spending, with the Ministry of Commerce reporting a rise to $144 billion in non-financial commitments in 2024. However, transaction-level data compiled by Rhodium Group suggests that this reported increase may not represent genuine foreign direct investment in real economy operations.