There's more at play here than just Trump's trade war, but that's how this started.
The New York Times reports that Chinese investment in American real estate and business opportunities has dropped off a cliff with nearly 90 percent of investment vanishing since Trump took office.
Chinese foreign direct investment in the United States fell to $5.4 billion in 2018 from a peak of $46.5 billion in 2016, a drop of 88 percent, according to data from Rhodium Group, an economic research firm. Preliminary figures through April of this year, which account for investments by mainland Chinese companies, suggested only a modest uptick from last year, with transactions valued at $2.8 billion.
“I certainly hear in conversations with investors a lot of concern about whether the U.S. market is still open,” said Rod Hunter, a lawyer at Baker McKenzie who specializes in foreign investment reviews. “You have a potentially chilling effect for Chinese investors.”
What changed between President Obama's last year in office and Trump's second year in office?
Trump started his trade war with China in 2017 when he imposed tariffs on foreign solar panels, the bulk of which are produced in China. He escalated his trade war dramatically in 2018 by imposing tariffs on foreign steel and aluminum and, eventually, over $250 billion in other Chinese goods. He also threatened and is currently threatening to impose tariffs on another $300 billion in Chinese goods.
In addition to his tariffs, the Trump regime has also taken steps to scrutinize a wide range of Chinese business activity with Chinese-owned telecommunications giant Huawei simply being the most visible target that you've probably seen in the news.
The New York Times calls this an "economic cold war" and that feels like appropriate term to me.
You might consider this good news if you're among those who believe Chinese firms own too much property in America, but consider the long-term economic implications of the most populous country in the world deciding that America is a bad investment.
Americans, on the other hand, can't really afford to decide that China is a bad investment. Everyone from Hollywood, to Silicon Valley and even Midwestern farm country need access to China's 400 million and growing middle-class consumers. They need foreign customers to sustain growth. How well a film performs overseas, for example, can determine whether a movie merits a sequel that will lead to film companies spending money on production in states like Georgia or Louisiana.
You may have heard that Avengers: Endgame just surpassed James Cameron's Avatar as the highest grossing movie of all time with $2.79 billion in ticket sales, but what you may not know is that $1.9 billion or nearly 70 percent of that total came from foreign markets. And out of $1.9 billion in foreign tickets sales, at least $614 million came from China.
Marvel Studios spent approximately $700 million on production for Infinity War and Endgame and most of the production took place in Atlanta, Georgia.
Craig Allen, the president of the U.S.-China Business Council, said the loss of Chinese investment would be felt predominantly in rural states where Chinese investors have bought factories and revived struggling businesses.
“The not-so-welcome mat is out, and it is having a deleterious effect on relatively poorer areas in the United States that need jobs,” he said.
“The Chinese hear from our state and local officials that they’re welcome,” Mr. Allen said. “What they’re hearing from federal officials is quite different.”
In Kentucky’s Ballard County, local officials are grateful that China’s Shanying International Holdings acquired a closed paper mill last year. In May, the mill reopened and filled many of the 300 jobs that had been lost.
Mayor Brandi Harless of Paducah, Ky., who traveled to China to meet executives of the company this year, said that it would be a shame if trade tensions hampered manufacturing investments in towns such as hers.
Yeah, it would be a shame if the people who elected Trump were harmed the most by his policies.
Republican voters are almost always harmed the most by Republican policies, and yet they keep voting for Republicans.