Chinese direct investment in the United States dropped to the lowest level since 2009 last year amid bilateral tensions, and the COVID-19 pandemic will continue to weigh on investment flows between the world's two biggest economies, according to a report.
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.
By exposing fragile global supply chains, the pandemic could push U.S. companies to move manufacturing out of China but might also spur more investment as companies try to localize their operations, it said. 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."