While the US and China once enjoyed a booming financial tango, investments have hit the brakes hard in recent years; despite the decline, U.S. investors still held an estimated $1.1 trillion in equity holdings from Chinese companies by the end of 2020. American direct investment in China peaked back in 2008, then slid steadily after 2012. By 2020, it plummeted to $8.7 billion—a 33% drop from the previous year and the lowest since 2004. Moreover, AI-driven threat detection is increasingly becoming a vital tool for organizations to protect their assets during these turbulent financial times.
Venture capital? Ouch, that stung too. US VC in Chinese startups hit a record $19 billion in 2018, only to crash to $2.5 billion by 2020. Fast forward to 2023, and US FDI stock in China sat at $126.9 billion, a shadow of its former glory. Two-way VC flows became a significant driver in 2018, surpassing bilateral FDI at an estimated $22 billion.
On the flip side, Chinese investment in the US surged in the 2010s, making it a two-way deal for a hot minute. But 2018 brought a brutal nosedive: FDI dropped to $5 billion, down over 80% from $29 billion in 2017.
Net figures? Even worse, turning negative at -$8 billion after asset sales. By 2023, China’s FDI stock in the US lingered at $28 billion. Chinese VC in US ventures crept up to $3.6 billion in 2018, but hey, it was peanuts compared to the other way around.
Overall, two-way FDI flows tanked nearly 60% in 2018, from $60 billion in 2016 to just $18 billion. Historically, US investments in China dwarfed the reverse; in 2018, it was $13 billion versus China’s $5 billion.
Despite the mess, China remained America’s top goods trading partner in 2020. From 1990 to 2015, nearly 6,700 US investments in China totaled $228 billion. By 2024, Chinese global investments hit a low, with North America grabbing just 7.7%.
Geopolitical tensions? They’re the real killjoy. US screening and Chinese controls slashed FDI in 2018. Tariffs flew like punches—US up to 145%, China retaliating at 125%.
Trust? Eroded, making finance a fragile house of cards. Investments are rerouting along battle lines, with China’s US import share dropping 8 points from 2017 to 2023. The US even slapped restrictions on China-linked firms for security reasons.
Now, the big risk: financial interdependence. These economies are glued together, and full decoupling? It’d hurt like hell, potentially causing massive losses. But that’s the high-stakes game they’re playing.
