INVESTMENT between the United States and China tumbled to a nine-year low in the first half of 2020, hit by bilateral tensions that could see more Chinese companies come under pressure to divest U.S. operations, a research report said.

Investment, both direct investment by companies and venture capital flows, between the two countries fell 16.2 percent to US$10.9 billion in the January-June period from the same period a year earlier, also hurt by the coronavirus pandemic, according to figures from consultancy Rhodium Group.

That is a far cry from half-yearly totals of nearly US$40 billion seen in 2016 and 2017.

Citing “national security risks” posed by Chinese technology firms, U.S. President Donald Trump’s administration has sharply expanded actions to hobble Chinese companies.

This has included putting telecom giant Huawei Technologies Co. on its trade blacklist, threatening similar action for Semiconductor Manufacturing International Corp. and ordering TikTok owner ByteDance to divest the short-form video app.

ByteDance is currently seeking approval for a deal with Oracle Corp. that is structured as a partnership rather than an outright sale.

“At a time of rising discomfort with U.S.-China technology integration numerous other companies — both Chinese firms operating in the United States and U.S. firms with a presence in China may be forced to divest,” the report said.

It added that the U.S. treatment of ByteDance and the broader shift away from U.S.-China technology integration may lead to policies which make it more difficult for U.S. tech firms to operate in China.

Investment by U.S. firms in China in the first half tumbled 31 percent to US$4.1 billion, while investment by Chinese firms in the United States rose 38 percent to US$4.7 billion, the report said. That was mostly due to one deal, a Tencent Music-led consortium’s purchase of a minority stake in Universal Music for US$3.4 billion. (SD-Agencies)