China Restricts Companies From Investing in US as Tensions Rise

(Bloomberg) — China has taken steps to restrict local companies from investing in the US, according to people familiar with the matter, in a move that could give Beijing more leverage for potential trade negotiations with the Trump administration.

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Several branches of China’s top economic planning agency, the National Development and Reform Commission, have been instructed in recent weeks to hold off on registration and approval for firms that are looking to invest in the US, the people said, asking not to be identified discussing sensitive issues.

While China has previously placed restrictions on some overseas investments for reasons linked to concerns about national security and capital outflows, the new measures underscore tensions playing out between the world’s two biggest economies as Donald Trump ramps up tariffs. China’s outbound investments into the US totaled $6.9 billion in 2023, according to the latest available figures.

There’s no sign that existing commitments by Chinese companies in the US and elsewhere, or China’s purchases and holdings of financial products including US Treasuries, would be affected, the people said. It’s unclear what prompted the NDRC to halt the processing of applications or how long this suspension might last.

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The NDRC and the Ministry of Commerce, both in charge of initial approvals for companies’ foreign investment, didn’t immediately reply to a request for comment.

US equity futures dropped to session lows after the Bloomberg report. European stocks also extended their decline.

On Wednesday, Trump unveiled plans for so-called reciprocal tariffs on US partners, with China now facing a levy of at least 54% on many goods. A memorandum issued by the US president in February told a key government committee to curb Chinese spending on tech, energy and other strategic American sectors.

China has already been increasing scrutiny of outbound investments by domestic companies after record capital outflows put pressure on the yuan, Bloomberg News reported earlier this year.

While the latest restriction mostly applies to corporate investment in the US, the move adds uncertainty for firms that are seeking to shift production abroad to bypass the trade barriers and attempt to navigate an intensifying global standoff.