Business & Investment

US-China investment dwarfs official numbers: Reuters study

© Reuters. File Photo: The HKEX sign can be seen at the 2020 China Service Trade Fair in Beijing.


Ross Carver

Boston (Reuters)-Total investment between the US and China is much larger than official figures reflect, a report released Tuesday said US President Joe Biden during a cold period of bilateral relations. It highlights the challenges facing the foreign policy team.

“People of all kinds will lose a lot,” said Adam Risenko, associate director of research firm Rhodium Group, as leaders continue to divide the world’s two largest economies.

It wrote a report published by the National Committee on Sino-US Relations, a group of influential Washington business and diplomatic leaders. Relations between the two countries are tense on many issues, including human rights and trade rules.

The report estimates that US investors will hold $ 1.2 trillion in equity and debt securities issued by Chinese entities at the end of 2020. This is five times the level shown in official US Treasury data. Most of the differences, according to the report, were due to Chinese companies “using complex legal structures to issue shares from tax havens traded on US exchanges.”

Meanwhile, China’s US securities holdings amounted to $ 2.1 trillion at the same time, 36% higher than official figures suggest. According to the report, most of the differences are due to “investor efforts to circumvent Beijing’s capital restrictions or equity investments misclassified by official sources for use in Hong Kong as an investment intermediary.” It was a thing.

However, due to capital restrictions, financial integration between the two countries is also low, Lysenko said. If the policy is relaxed, the total portfolio investment in both countries will now exceed $ 9 trillion, compared to about $ 3 trillion, he said.

In less than a week, Biden’s foreign policy and trade team inherited a series of hard-line policies implemented by former US President Donald Trump’s administration.

An executive order in November requires U.S. investors to sell from 44 companies allegedly associated with the Chinese military, but conflicting statements from the agencies handling the deployment confuse shareholders. Caused.

Few investors expect the new administration to roll back the rules quickly, and government officials give little official guidance.

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US-China investment dwarfs official numbers: Reuters study US-China investment dwarfs official numbers: Reuters study

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