Wednesday 8 January 2020 12:45 am

Chinese investment in Europe and North America slumps to nine-year low

Chinese investment in Europe and North America hit a nine-year low in 2019, new analysis has shown, as Beijing focused increasingly on the domestic economy and geopolitical tensions hurt capital flows.

Chinese foreign direct investment in Europe tumbled 40 per cent in 2019 and fell 27 per cent in the US, analysis from law firm Baker McKenzie and research provider Rhodium Group showed.

Read more: Giant US services sector ends the year on a bright note

Global trade, markets and investment were rattled in 2019 as the US and China locked horns in a trade war that saw tariffs slapped on billions of dollars of goods.

The two sides are due to sign “phase one” of a trade deal on 15 January, however, which markets hope will reduce tensions for the time being.

In 2019, Chinese investors only completed $5.5bn (£4.2bn) of deals in the US and Canada, down again from $7.5 billion in 2018. This was the lowest annual investment since 2009.

Baker McKenzie said restrictions on outward cash flows from Beijing, strengthened regulatory reviews in the US and Europe, and slowing growth and lower liquidity in the Chinese economy all contributed to lower investment.

Yet the law firm said a number of factors suggested Chinese investment could climb in 2020. It cited easing trade tensions and intervention by Beijing to boost liquidity in the Chinese economy.

Read more: China cuts banks’ reserve ratios to spur economy

Baker McKenzie said that the UK is expected to launch a charm offensive to woo Chinese investors as it leaves the EU.

Peter Lu, head of Baker McKenzie’s China Group in London, said: “Chinese investors remain relatively attracted to both the UK’s robust, open economy, and its ethos which has endured even throughout Brexit: the UK is open for business and ready for opportunity.”

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