Last Year, US Venture Investment in China Plummeted to One-Quarter

[Asia Economy Beijing=Special Correspondent Park Sun-mi] As the US-China trade war expanded into a technology war, US venture investment in China shrank to about one-quarter of the previous level last year.

According to a report released on the 15th by consulting firm Rhodium Group and the National Committee on US-China Relations (NCUCR), US venture investment in Chinese startups last year fell to the lowest level in six years. The amount was less than $4 billion, only about one-quarter of the $17.4 billion peak in 2018.

The report explained that the sharp decline in US venture investment in China was the result of not only a cooled investment atmosphere in China's technology sector but also political uncertainty and policy headwinds caused by the US-China trade war. In particular, it diagnosed that defensive technology policies between the two countries, which are under discussion or being implemented during the US-China trade war, are reducing the attractiveness of Chinese investment for US companies.

Furthermore, Chinese venture investment in the US is also showing a sharp decline. As of the first half of last year, it amounted to only $1.1 billion, down to half of the $2.5 billion in the first half of 2018. As the US restricted foreign direct investment targeting China, the scale of Chinese capital acquisitions of US assets was only $18 billion last year. This is also less than one-third of the $60 billion record set in 2016.