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Foreign Investment Pours Into China Despite Trade War, Pandemic

For all the talk of an economic decoupling between China and the U.S. and its allies, foreign companies continue to pour money into the Asian nation.

The coronavirus pandemic and trade tensions have highlighted the risks of over-reliance on China, prompting several countries to consider diversifying supply chains, with a potential knock-on effect on investment.

Yet the latest official data from China shows that hasn’t happened. New foreign investment is on track to set another record in 2020, hitting 94% of last year’s total by the end of November, according to Commerce Ministry data released this week.​

Not only is that helping to drive the economic rebound, but with China reducing barriers to investment and the economy the only major one likely to grow this year, investment is set to continue flowing into the country.

“U.S. and other foreign firms will continue to invest in China as it remains one of the most resilient economies during the global pandemic and as future growth potential there remains stronger than most other major economies,” said Adam Lysenko, an analyst at Rhodium Group who researches Chinese investment.

The investment boom comes despite continued political uncertainty for foreign firms. The Trump administration has ratcheted up tensions in recent months, placing restrictions on Chinese businesses, especially in the technology sector. China’s policy toward the incoming Biden administration is still unclear. And an investment treaty between the European Union and China hasn’t yet been signed, although it’s getting close.

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