(Yicai Global) June 21 -- Chinese companies invested USD1.8 billion in the United States during the first five months, 92 percent less than the same period a year earlier and the lowest in seven years as Washington shut down deals and Beijing sought to rein in big spenders to cool off debts.
Net direct investment into the US, factoring in asset sales, was negative USD7.8 billion, according to a report by New York-based researcher Rhodium Group. Chinese investors sold USD9.6 billion worth of American assets during the period as Beijing cracked the whip on its deleveraging efforts.
The investment trough follows a sharp drop in foreign direct investment into the US last year. Whole-year FDI in 2017 was USD29 billion, compared with a record-high USD46 billion a year earlier.
Beijing began clamping down on what it considered "irrational" overseas spending in December 2016, with a focus on real estate, hotels, cinemas, entertainment and sports club. The campaign came to bore fruit the next month, when outbound investment fell year-on-year after property purchases decline by 80 percent, according to official data.
As a result, health and biotech investments made up the majority of China's cross-Pacific investment over the first five months this year. Real estate and entertainment filled out the remaining top two sectors, though property spending made up just one fifth of total FDI, down from 36 percent throughout 2017.
The American government has shut down a number of mergers and acquisitions so far this year, including Ant Financial Services Group's USD1.2 billion bid for cash transfer platform MoneyGram International, Chinese conglomerate HNA Group's efforts to take over global investment firm SkyBridge Capital, and Sino IC Capital's plans to buy American semiconductor tester Xcerra for USD580 million.
As well as investing less, Chinese companies are also selling more. HNA has shed a bunch of American assets, including properties in New York and San Francisco and a stake in Hilton Worldwide; property giant Dalian Wanda Group is selling its Vista Tower in Chicago and One Beverley Hills in Los Angeles, and Anbang Insurance Group, now under control of the state, is rumored to be planning sales, the report added.
Editor: James Boynton