How has the US-China trade war affected financial services FDI?

As trade tension mounts between the US and China, The Banker has examined the two economic superpowers’ expansion into each other’s jurisdiction in terms of financial services foreign direct investment (FDI), as well as at the growth and size of their global reach. 

Between April 2018 and March 2019, $135.2m-worth of US financial services FDI reached Hong Kong but mainland China did not have one representative in the top 10 global destination cities, according to estimates from greenfield monitor fDi Intelligence.

Over the previous 12-month period, Hong Kong received about the same amount, but a considerable higher $484.8m poured into Shanghai, making it the world’s largest recipient of US financial services FDI.

In the opposite direction, Chinese investments into US hubs were too small to register in the global top 10 lists. Between April 2018 and March 2019, the largest recipient of Chinese global investment was Brasilia with $255.5m, followed by Singapore with $162.5m, and then Hong Kong with $106.2m. Singapore, Hong Kong and Auckland topped the previous ranking, but with considerably smaller investment levels. 

While China has nearly doubled its outward financial services FDI over the past year as a measure of flows received by the top 10 destinations, the US’s has been reduced by nearly one-quarter.

US global outward FDI, however, is currently twice as large as that of China.