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This shift has profound implications. China is not merely sitting on its dollar earnings; it is investing these dollars elsewhere. Rather than funneling them back into the US economy, Chinese authorities are actively seeking alternative avenues for their capital. This could be described as a “double whammy” against the US economy: outflows are increasing while inflows are stalling.
Decline in Foreign Investment in the US
In a further twist, between 2021 and 2022, foreign direct investment (FDI) from China to the US plummeted by over half, presenting a troubling snapshot of waning economic ties and trust. Notably, China’s FDI seems to be directed towards other markets while retreating from the American landscape, fueling speculations about future economic partnerships and investments.