Even before any tariffs proposed by Trump come into effect, Chinese firms have begun channeling investments into the United States.

Increasing tensions between the U.S. and China have prompted Chinese firms to consider overseas investments, regardless of the outcome of the U.S. presidential election. Recent public filings from companies listed in mainland China reveal that some are already channeling funds into the U.S. market. As the financial community awaits more information on Vice President Kamala Harris’ stance on China, former President Donald Trump, the Republican nominee, has suggested the possibility of additional tariffs. According to BCA Research, Trump might leverage tariffs to negotiate a deal that encourages China to boost foreign direct investment in the U.S. This strategy was hinted at in his acceptance speech for the Republican nomination, where he emphasized the need for Chinese companies to manufacture their products in America to create jobs and wealth domestically.

Several Chinese companies have already taken steps in this direction. For instance, Vital New Material has registered a subsidiary in Austin, Texas, with a capital of $2 million to focus on R&D and sales of soldering materials. Shandong Yuma Sunshade is investing $1.2 million to set up a subsidiary and warehouse in Texas. Xinquan Automotive Trim plans to invest $4 million through a Singapore subsidiary into its U.S. operations for auto parts. Yotrio has established a U.S. company for outdoor furniture sales, and Hanbell is setting up a $100 million subsidiary in Georgia for vacuum pump products. These are among over 30 filings this year for U.S.-related business ventures by Chinese firms, with more than 50 such filings recorded in 2023.

BCA Research advises caution, noting that Harris’ rising poll numbers make Trump’s victory uncertain. They recommend waiting for potential trade war developments before making investment decisions. Meanwhile, a survey by the China General Chamber of Commerce in the U.S. found that about 30% of Chinese companies plan to increase their U.S. investments, with nearly 60% maintaining stable investment levels. The pandemic has accelerated Chinese firms’ interest in overseas expansion due to slower domestic growth. Companies like BYD are also setting up factories in Europe and Southeast Asia in response to increasing tariffs on Chinese electric car imports by the EU and the U.S.

Oxford Economics reports that over 80% of Chinese companies intend to maintain or increase their outbound investments in 2023, a significant rise from 2022. The focus of Chinese investments has shifted from tertiary to manufacturing sectors. Despite a decline in new investments from China in the U.S., Chinese companies have not significantly withdrawn from the American market.