By stymying dealmaking and hitting economic growth, the pandemic could dissolve the positive effects of the Phase 1 trade deal signed in January, said the report from research firm Rhodium Group and the National Committee on U.S.-China Relations.
But U.S. companies announced $2.3 billion new direct investment projects in China in the first quarter, only slightly down from last year's quarterly average, said the report. U.S. companies do not seem to be considering significantly reducing their China footprint, said the report. U.S. investment into China grew slightly in 2019 to $14 billion, with overall two-way flows flattening after big declines in the previous two years. Chinese investment in the U.S. dropped to $5 billion that year from $5.4 billion the year before, according to the report.
The pandemic could have been an opportunity for the U.S. and China to work together, said the report, but"intensifying economic competition and a systemic battle of political systems continue to weigh on the relationship as governments engage in blame games."