Foreign investment in the US declined during 2018 and at the World Economic Forum (WEF) meeting which is taking place in Davos, Switzerland, business leaders have warned that investment won't pick up until Trump changes policy direction.

By Daniel Herborn


Posted on January 24, 2019

At last year’s meeting, Trump announced: “There has never been a better time to hire, to build, to invest and to grow in the United States.” He then yelled: “America is open for business and we are competitive once again!”

“We are creating an environment that ATTRACTS capital, INVITES investment, and REWARDS production,” he continued. “America is the place to do business – so come to America where you can INNOVATE, CREATE and BUILD.”

Trump has been a notable absentee from the WEF

Such confident rhetoric has not equated to improved investment figures, however, and business leaders at this year’s WEF meeting have been voicing their concerns that Trump’s trade war with China will only dampen economic growth and discourage further investment.

Trump elected to skip Davos this year, a situation described as “an accurate reflection of global affairs over the last year,” by Cailin Birch, Global Economist at the Economist Intelligence Unit.

Birch said that Trump was likely to continue to turn away from treaty organisations and international bodies. “We expect the U.S. to become increasingly isolated on the international stage, as Mr Trump pursues his America First strategy,” she said.

In a statement, White House Press Secretary Sarah Huckabee Sanders said Trump had cancelled his trip to the WEF “out of consideration for the 800,000 great American workers not receiving pay and to ensure his team can assist as needed.”

Per figures from the United Nations Conference on Trade and Development (UNCTAD), foreign investment in the US fell around 18% in 2018 from the previous year. While global figures on foreign investment were down last year, China managed to buck the trend as foreign investment there grew 3% on the previous year. India also recorded a 7% growth in foreign investment from 2017.

Chinese companies finding it harder to do business with the US

Unilever CEO Alan Jope told Reuters that the US remained a strong market for his company’s consumer goods, but China had become more resilient. “China provides the new stability in consumer consumption,” he added.

A number of prominent Chinese companies, including Alibaba, have scaled back their plans to invest in the US. GAC Motor, a Chinese automaker, has postponed its move into the US market.

Tech companies have been particularly impacted by the disruption to trade. Apple has recently announced lower than expected quarterly revenues after iPhone demand in China fell away. Samsung Electronics, the world’s biggest manufacturer of smartphone chips, also said its Q4 profit was down 29%.

Alan Jope
Unilever CEO Alan Jope

There is also a perception that Chinese companies seeking to invest in the US are facing more red tape. Last year, the Trump administration bolstered the investigative power of the Committee on Foreign Investment (CFIUS). The CFIUS is a merger review committee which considers acquisitions on national security grounds.

Ning Gaoning, Chairman of China’s state-owned Sinochem Group, said he was not optimistic the company would secure the US merger it was seeking. “I think you will see there will be less investment going abroad,” he said.

Header image credit: World Economic Forum