China Proposed $1T of Investment in USA to Ward Off Tariffs
As more details trickle down from the US-China Trade Talks, we now learn that China has made an alluring proposal to the US to invest up to USD one trillion. As per the proposal, China would build factories directly on US soil in exchange for lower #tariffs and guaranteed market access.
On the one hand, the Proposal is aligned with Trump’s Make America Great Again (#MAGA) by attracting more Foreign Direct Investment (#FDI) and creating jobs for Americans. Previously, the negotiations focused on reducing the trade surplus that China enjoyed and now the focus appears to be shifting to the investment side.
Former Deputy National Security Advisor Matt Pottinger raised some concerns about this Proposal. Republican congressman John Moolenaar, who also chairs the House Select Committee on China, also warned that ‘China routinely cheats on its deals with America.’
“That would be tantamount to the US becoming part of the Belt and Road Initiative (#BRI) — indeed, its final destination.”
Former US Deputy NSA Matt Pottinger
Contacted for a comment, the Chinese side was rather cryptic and generic. A representative from the China’s embassy in Washington DC simply reiterated that China hopes that US will implement the ‘key common understandings’ reached by the heads of state over their previous phone conversation. It is to be recalled that the Chinese negotiating team spokesperson, LI Chenggang, last told reports after the Madrid meeting that ‘both sides are willing to move together toward the same goal.’
In terms of scale, the Chinese $1T investment would be one of the largest, if not the largest of all the investment deals so far. From a historical perspective, the amount would definitely represent a new record. According to data compiled by Rhodium Group, China’s FDI into US has dropped a just ‘a few billions’ after its high of $60B in 2016.
Saudi Arabia promised a few trillions, EU pledged $600B, while Japan committed $550B. Trump himself claims he has managed to secure investments, including nationally and internationally, totaling $17B during the first three quarters of his 2nd term, much more than Biden did during his whole four-year term.
“China has weaponized its own market and companies against us for decades, and we cannot allow those companies to have more access to our economy.”
US Select Committee on China Chair John Moolenaar
It is rumored that a Trump-Xi meeting might be possible on the sidelines of the APEC Summit 2025 in South Korea which is coming up at the end of October 2025. It is worth recalling that South Korea has indicated that it is willing to invest up to $350B into US.
The American President has indicated that he is prepared to visit Beijing in the near future. It is believed that Xi invited Trump to Beijing to attend the military parade to mark the 80th Anniversary of the V-Day for WWII, but Trump preferred to wait for a substantial deal to be reached before any face-to-face meeting.