The Federal Reserve Board published analysis finding a broad retreat in U.S. direct investment in China across greenfield projects, acquisitions and the operations of existing Chinese subsidiaries of U.S. multinationals. The decline reflects both slower new investment and a reduction in established corporate footprints, reversing decades of deeper economic integration. Greenfield projects, which averaged about 300 annually from 2003 to 2013, fell sharply in 2020 and did not recover through 2025. U.S. acquisitions of Chinese companies dropped notably in 2022 and remained low, while acquisition values declined from 2024. Existing operations also showed a pullback, with dividend payouts overtaking reinvested earnings in recent years, capital expenditure rates falling and more subsidiaries reporting asset sales or negative growth in property, plant and equipment. The analysis finds that official bilateral statistics materially understate U.S. exposure because investments are often routed through Hong Kong and other hubs. While the evidence points to fragmentation following the 2018 tariffs, the COVID-19 pandemic and Russia’s 2022 invasion of Ukraine, it does not isolate the effects of trade tensions, geopolitical risks, investment screening or other barriers.
2026-09-25Federal Reserve Board
Federal Reserve Board analysis finds broad decline in US direct investment in China through 2025
Federal Reserve Board analysis finds a broad decline in U.S. direct investment in China, covering new projects, acquisitions and investment by existing subsidiaries. U.S. multinationals are also repatriating more earnings and reducing their Chinese operating footprints. Official bilateral data understate the exposure because investments are often routed through Hong Kong and other hubs.