China is restricting domestic companies from investing in the United States, a move that signals rising tensions between the world's two largest economies as former President Donald Trump prepares to unveil a new tariff framework. Several branches of the National Development and Reform Commission (NDRC), Beijing's top economic planning agency, have been instructed in recent weeks to withhold approvals for firms seeking to deploy capital into the U.S., according to people familiar with the matter.
The freeze, first reported by Bloomberg News, does not impact existing Chinese business operations in the United States or holdings of U.S. Treasuries and other financial assets, but it adds a new layer of complexity to already strained U.S.-China economic relations. Chinese companies invested $6.9 billion in the U.S. in 2023, a figure that represents just 2.8% of the country's cumulative outbound investment stock.
The decision appears to be part of a broader strategy to give Beijing negotiating leverage as the Trump administration escalates its trade posture. Trump is expected to announce a package of reciprocal tariffs during a Wednesday press conference at the White House. In February, he issued a memorandum directing federal agencies to clamp down on Chinese investments in key sectors such as technology and energy.
Market reaction to the reports was swift. U.S. equity futures fell to session lows, and European stocks extended losses following Bloomberg's initial publication. Investors are weighing the prospect of renewed trade hostilities that could disrupt global supply chains and corporate investment flows.
The Ministry of Commerce and the NDRC did not respond to requests for comment. The new restrictions come as Chinese regulators also move to delay a $22.8 billion global ports sale involving Hong Kong-based CK Hutchison Holdings Ltd., a company controlled by billionaire Li Ka-shing. The firm had agreed to sell 43 port facilities-including strategic terminals at both ends of the Panama Canal-to a consortium led by U.S. asset manager BlackRock.
China's State Administration for Market Regulation intervened last week, launching a probe into potential anti-monopoly violations and effectively stalling the deal. Sources told the Wall Street Journal that President Xi Jinping was angered by CK Hutchison's decision to proceed without Beijing's prior approval, particularly given the geopolitical sensitivities surrounding the Panama Canal.
The action against CK Hutchison may also signal a broader effort by Beijing to discourage alliances with firms tied to U.S. capital. According to Bloomberg, Chinese state-owned enterprises were quietly instructed to pause new dealings with entities linked to the Li family.
China's outbound investment behavior has come under heightened scrutiny since early 2023, when regulators began reining in capital outflows to stabilize the yuan. The Ministry of Commerce's latest data show that while overall foreign investment by Chinese firms rose 8.7% last year, investment into the U.S. declined by 5.2%.
"Domestic companies planning investment projects abroad are required to follow filing and approval procedures," a source told Bloomberg, noting that the current freeze affects applications handled by the NDRC, Ministry of Commerce, and the State Administration of Foreign Exchange.
Tensions have intensified further after Trump raised tariffs on a range of Chinese goods to 20%, while also slapping 25% duties on imports from Canada and Mexico. Beijing responded with tariffs of up to 15% on U.S. agricultural exports and expanded its export controls to include dozens of American companies.
"If war is what the US wants, be it a tariff war, a trade war or any other type of war, we're ready to fight till the end," China's embassy in Washington posted on X, formerly Twitter.
