Chinese investment in the United States has declined sharply since Donald Trump’s first term. Analysts say that trend is unlikely to be reversed with Trump returning to the White House.

Trump threatened to impose tariffs on Chinese goods shortly after taking office on Monday, underpinning an increasingly hardline U.S. stance against Beijing.

"The last thing Trump wants to do is try to incentivize (Chinese companies) to invest here," said Rafiq Dosani, an economist at the Rand Corporation, an American think tank.

"There's an ideological mismatch. All the talk is, keep China out of the United States and let their low-end products in," he said in an interview earlier this month. But other than that, "Don't, don't let them in."

In the past few weeks, UAE real estate giant Damac has pledged to invest $20 billion in building data centers in the United States, while SoftBank CEO Masayoshi Son has announced a $100 billion investment in U.S. artificial intelligence development during Trump's four-year term.

New data from the American Enterprise Institute shows a sharp slowdown in Chinese investment deals in the United States. In the first six months of 2024, inflows into the United States were only $860 million, compared with $1.66 billion in 2023. That's down sharply from $46.86 billion in 2017, when Trump began his first term.

In its heyday, Chinese companies made high-profile acquisitions in the United States, such as New York's Waldorf Astoria Hotel. But regulators on both sides blocked the flow.

Danielle Goh, senior research analyst at Rhodium Group, said: “Chinese investment in the United States has slowed significantly since Beijing tightened controls on capital outflows in 2017, and the United States subsequently introduced a series of regulatory policies aimed at excluding investment in certain industries. ” in an email.

In the "foreseeable future," she does not expect Chinese investment in the United States to return to the peak levels of the 2016-2017 period. Wu noted that Chinese companies are no longer making acquisitions and are turning more to small joint ventures or greenfield investments with U.S. companies, where operations are built from the ground up.

For example, Chinese battery manufacturing company Yiwei Lithium Energy has established a 10% joint venture as a technical partner with the Accelera unit of the American engine company Cummins, Daimler Trucks and PACCAR. The companies announced in June 2024 that they had launched plans to build a battery factory in Mississippi that would begin production in 2027 and create more than 2,000 jobs.

Siva Yam, the nonprofit's president, told CNBC that since the Covid-19 pandemic, the U.S.-China Chamber of Commerce has mainly helped Chinese e-commerce companies set up local offices rather than setting up manufacturing businesses.

“Today, most of these investments are smaller, so they get less attention and are easier to get approved,” he said, referring to U.S. and Chinese regulators. But he remains unsure whether Chinese companies can use investments to offset the impact of tariffs.

U.S. states are increasingly wary of Chinese investment. Last spring, Politico reported that more than 20 states were passing new restrictions on land purchases by Chinese citizens and businesses, or updating existing rules.

In December, Chinese hackers attacked a government office responsible for reviewing U.S. foreign investments, CNN reported, citing U.S. officials. It was part of a broader breach at the Treasury Department, which declined CNBC's request for comment.

Trump says tariffs may be used to coerce Chinese investment in U.S.

"I will bring auto jobs back to our country through the appropriate use of taxes, tariffs and incentives, and not in Mexico, China, or other countries," he said in his speech accepting the Republican nomination.

"The way they sell their products in the United States is they make them in the United States and only in the United States," he said, according to an NBC News transcript. "That's going to create a lot of jobs and a lot of wealth in our country."

Chinese battery giant CATL reportedly said in November that it would build a factory in the United States if Trump allowed it. The company did not immediately respond to a request for comment.

The Center for American Progress, an advocacy group, noted in December that Trump had lifted restrictions on Chinese telecoms company ZTE during his first term — just days after the Chinese government and Chinese banks issued orders to companies owned by the Trump Organization US$1 billion invested in Indonesian theme parks.

The Trump transition team did not immediately respond to a request for comment on the ZTE deal or investment opportunities for Chinese companies in the United States.

Derek Smith, a senior fellow at the American Enterprise Institute, pointed out that even if Trump welcomes more Chinese investment or coerces Chinese investment through tariffs, large-scale investment is a long-term process and will not happen overnight.

Additionally, the president-elect’s policies are unpredictable.

He said: "Trump said that the United States will open to Chinese companies in 2025, but this does not guarantee that it will also happen in 2029."