China Freezes Investments in the United States and Abandons Interdependence*
The strategy, once considered the antidote to geopolitical tensions, was sidelined for internal and external reasons.
China has decided to freeze all new business investments in the United States. The Japanese agency Nikkei revealed the measure on Thursday indefinitely suspending approvals for Chinese businesses to open or expand operations on American soil. It blocks acquisitions and greenfield projects, among other projects, those that start from zero (including small projects that previously required only local notification).
The freeze comes amid a new chapter in the trade war between the two biggest economies in the world and, for now, no one is forecasting any reversal.
The direct economic impact, in truth, tends to be less devastating than imagined in the short term. Direct Chinese investment in the United States has already been declining for almost a decade. In 2016 at the height of the bilateral rapprochement, the volume reached $46 billion, but was just $3.2 billion in 2024.
But the impact of the move is less in the amount and more in what it represents. By ceasing investment, China transforms the way it has historically viewed the role of its spending and in turn abandons the principle of economic interdependence, once treated as an antidote to strategic tension. Capital, which once symbolized rapprochement between both sides, now is a symbol of this distancing.
There are internal and external reasons for this measure. For China, the priority has been to strengthen its technological self-sufficiency and the control of private capital. Sectors such as semiconductors, electric vehicles and artificial intelligence have drawn domestic attention. China invested more than $ 30 billion dollars in electric vehicles alone in Europe, but less than $7 billion in the United States, having been barred by U.S. regulation.
At the same time, Washington has been restricting entrance of Chinese capital into sensitive sectors. The Inflation Reduction Act and the CHIPS act, both passed during Joe Biden’s administration, imposed barriers to foreign participation in technology, energy and manufacturing. There is no hope for relief in these sectors under Donald Trump. On the contrary, the tendency, as we have seen, is for things to get worse.
The effects are more visible in the United States where there are deep economic ties with China. California has already seen more than $10 billion in Chinese investment and is a home for more than 100,000 jobs linked to that money. Texas, a Republican bastion, is another state that has amassed more than $6 billion in investments, just as other states such as New York, Michigan and North Carolina, have significant exposure to this capital. The freeze will invariably have concrete consequences for supply chains and innovation in these regions.
We still haven’t arrived at the point of complete decoupling, which studies suggest could cost the U.S. gross domestic product $190 billion dollars per year. Even so, the loss of production and payroll already exceeds $10 billion in certain sectors and, for instance, the semiconductor business alone could lose as much as $124 billion and more than 100,000 jobs.
It is the end of an era. Foreign investment, once associated with openness, confidence and the promise of economic convergence, has become something we must treat as a risk, lever or threat. The language of capital now is not neutral (was it ever?), and the freeze, imposed by Beijing, breaks with the logic of automatic flow and mutual interest, formalizing a world in which money also obeys geopolitics, and where pragmatism, until further notice, stops being the rule.
*Editor’s note: This article is available in its original Portuguese through a paid subscription.
China has decided to freeze all new business investments in the United States. The Japanese agency Nikkei revealed the measure on Thursday indefinitely suspending approvals for Chinese businesses to open or expand operations on American soil. It blocks acquisitions and greenfield projects, among other projects, those that start from zero (including small projects that previously required only local notification).
The freeze comes amid a new chapter in the trade war between the two biggest economies in the world and, for now, no one is forecasting any reversal.
The direct economic impact, in truth, tends to be less devastating than imagined in the short term. Direct Chinese investment in the United States has already been declining for almost a decade. In 2016 at the height of the bilateral rapprochement, the volume reached $46 billion, but was just $3.2 billion in 2024.
But the impact of the move is less in the amount and more in what it represents. By ceasing investment, China transforms the way it has historically viewed the role of its spending and in turn abandons the principle of economic interdependence, once treated as an antidote to strategic tension. Capital, which once symbolized rapprochement between both sides, now is a symbol of this distancing.
There are internal and external reasons for this measure. For China, the priority has been to strengthen its technological self-sufficiency and the control of private capital. Sectors such as semiconductors, electric vehicles and artificial intelligence have drawn domestic attention. China invested more than $ 30 billion dollars in electric vehicles alone in Europe, but less than $7 billion in the United States, having been barred by U.S. regulation.
At the same time, Washington has been restricting entrance of Chinese capital into sensitive sectors. The Inflation Reduction Act and the CHIPS act, both passed during Joe Biden’s administration, imposed barriers to foreign participation in technology, energy and manufacturing. There is no hope for relief in these sectors under Donald Trump. On the contrary, the tendency, as we have seen, is for things to get worse.
The effects are more visible in the United States where there are deep economic ties with China. California has already seen more than $10 billion in Chinese investment and is a home for more than 100,000 jobs linked to that money. Texas, a Republican bastion, is another state that has amassed more than $6 billion in investments, just as other states such as New York, Michigan and North Carolina, have significant exposure to this capital. The freeze will invariably have concrete consequences for supply chains and innovation in these regions.
We still haven’t arrived at the point of complete decoupling, which studies suggest could cost the U.S. gross domestic product $190 billion dollars per year. Even so, the loss of production and payroll already exceeds $10 billion in certain sectors and, for instance, the semiconductor business alone could lose as much as $124 billion and more than 100,000 jobs.
It is the end of an era. Foreign investment, once associated with openness, confidence and the promise of economic convergence, has become something we must treat as a risk, lever or threat. The language of capital now is not neutral (was it ever?), and the freeze, imposed by Beijing, breaks with the logic of automatic flow and mutual interest, formalizing a world in which money also obeys geopolitics, and where pragmatism, until further notice, stops being the rule.
*Editor’s note: This article is available in its original Portuguese through a paid subscription.
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