Communist China’s Pain Is America’s Gain
Communist China’s Pain Is America’s Gain - Much of the foreign investment capital flight out of China is flowing into the United States.
Udumbara
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The days of nearly unlimited foreign direct investment (FDI) money flowing into China from all parts of the world are over. That’s not an exaggeration.
By the end of 2024, the level of FDI into China had fallen 99 percent in just three years. It’s not the cause of China’s economic malaise, but a symptom of the Chinese Communist Party’s mismanagement of the economy, its widespread abuse of the Chinese people, and its gross mistreatment of its foreign investment partners, which has only ratcheted up this year.
Capital Flows Redirecting From China to US
Not coincidentally, the U.S. economy is benefitting greatly from the capital stampede out of China. Make no mistake, the capital outflow is, indeed, a stampede. Foreign direct investment into China has fallen to just $4.5 billion last year, the lowest level since 1992. In 2024, China saw a record net FDI outflow of $168 billion. Last year saw the first annual net withdrawal since 1990, in response to the Tiananmen Square massacre.In contrast, the United States is attracting much of the foreign investment that’s fleeing China; not all of it, but much of it. And why wouldn’t it?
Businesses Facing Existential Threat in China With New Law
Specifically, as I discussed in an earlier post, in March 2025, China’s State Council issued new regulations on handling foreign-related intellectual property disputes (effective May 1). These measures empower central authorities to investigate, seize, or counter foreign-held IP or trade-related assets, especially in cases viewed as suppressive to China—even in the absence of fraudulent behavior. The law grants the Chinese regime’s opaque courts and commercial regulators sweeping jurisdiction under vaguely worded national security justifications.US Investment Pledges From Foreign Countries Are ‘YUGE’
By contrast, the Trump administration is seeing great success in attracting investment capital in almost unheard-of numbers. For example, in March of this year, the United Arab Emirates (UAE) committed to a 10-year, $1.4 trillion investment schedule in the United States. Taiwan chip maker TSMC has said it will increase its investment in U.S. production by $100 billion, while Japan has said it will invest $550 billion in the United States.What’s more, in the recent trade agreement between the European Union and the United States, the EU has said it will increase its investments in the United States, currently about $100 billion, by up to $600 billion by the end of Trump’s term. That’s in addition to the EU’s commitment to purchase $750 billion in American energy products.
The ‘Exit China Contagion’ Is a Lack of Trust Epidemic
Of course, the Chinese economy is even worse off than it was before the dramatic fall in foreign direct investment in recent years. It’s noteworthy that the CCP’s policies over the past two decades have gotten progressively worse, culminating with the huge increase in IP theft and other abuses that have driven multinational companies away.Ironically, it was only a few short years ago that Xi Jinping confidently announced the “Made In China 2025” initiative, declaring to the world that China would be the center of global high-tech manufacturing. Today, the Chinese regime is well on its way to being isolated in the world and facing deep crises of its own making, just as it was under Mao Zedong.
In contrast, the United States is seeing a resurgence in global trade, investment, and wealth.
