Board of Governors of the Federal Reserve System

Figure 1. U.S. financial transactions for FDI into China

This figure contains two related line charts showing annual data from 2005 to 2025, both measured in billions of 2017 U.S. dollars.

Left panel: FDI flows. This is a line chart with the y-axis ranging from -20 to 20 billion dollars. Two variables are plotted: "China" (red line) and "China + HK" (black line). Both series show significant volatility throughout the period. The China + HK series starts at about 10 billion dollars in 2005, peaks at approximately 19 billion dollars in 2008, drops sharply to about -17 billion dollars in 2010, then fluctuates between approximately -5 and 18 billion dollars through 2020. After 2020, the series shows a decline to about -5 billion dollars in 2021, followed by an increase to approximately 8 billion dollars by 2025. The China series follows a similar but less volatile pattern, starting at about 4 billion dollars in 2005, peaking at approximately 18 billion dollars in 2008, dropping to about -9 billion dollars in 2010, and fluctuating between approximately -3 and 12 billion dollars thereafter, ending at about 6 billion dollars in 2025.

Right panel: FDI positions. This is a line chart with the y-axis ranging from 0 to 200 billion dollars. Three variables are plotted: "FDI equity position in China" (red solid line), "FDI equity position in China + HK" (black solid line), and "AUSMNE net equity position in China" (blue dashed line). All three series show general upward trends over the period. The China + HK series starts at about 70 billion dollars in 2005 and increases to approximately 200 billion dollars by 2020, then declines to about 175 billion dollars by 2025. The AUSMNE net equity position series starts at about 70 billion dollars in 2005 and increases steadily to approximately 185 billion dollars by 2025. The China series starts at about 25 billion dollars in 2005, increases to approximately 110 billion dollars by 2020, then declines slightly to about 95 billion dollars by 2025.

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Figure 2. U.S. greenfield FDI into China

This figure contains two related charts showing data about U.S. greenfield FDI into China.

Top panel: Number of greenfield projects. This is a stacked bar chart showing annual data from 2003 to 2025. The y-axis measures the number of projects, ranging from 0 to over 400. Four industry categories are displayed: "High Tech" (dark red), "Advanced manufacturing" (dark blue), "Other manufacturing" (light blue), and "Other industries" (gray). The total number of projects shows a general upward trend from 2003 (approximately 100 projects) to a peak around 2007-2008 (approximately 410 projects). After 2008, the total remained relatively stable between 290 and 400 projects through 2012, then declined significantly. From 2013 onward, there is a sharp and sustained decrease, with total projects falling to approximately 225 projects by 2015, continuing to decline to about 190 projects by 2018, and further decreasing to approximately 60 projects by 2025. Throughout the period, advanced manufacturing (dark blue) represents the largest share, followed by high tech (dark red), with other manufacturing (light blue) and other industries (gray) making up smaller portions. By 2025, all categories show substantially reduced project numbers compared to earlier years.

Bottom panel: Investment shares. This is a line chart showing annual data from 2003 to 2025. The y-axis measures percent, ranging from 0 to over 30 percent. Two variables are plotted: "Share of U.S. outward FDI" (blue line) and "Share of all FDI into China" (orange line). The share of all FDI into China starts at about 24 percent in 2003, increases to approximately 31 percent in 2005, and generally fluctuates between 26 and 29 percent through 2015. After 2015, this share declines steadily, dropping to about 27 percent by 2018, approximately 20 percent by 2021, and reaching about 14 percent by 2025. The share of U.S. outward FDI starts at approximately 14 percent in 2003, peaks at about 15 percent around 2005-2006, then shows a gradual decline to about 10 percent by 2010. This share continues to decrease, falling to approximately 6 percent by 2016 and remaining relatively stable between 4 and 6 percent through 2020, before declining further to approximately 2 percent by 2025.

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Figure 3. U.S. M&A into China

This figure contains two related charts showing annual data from 2005 to 2025 about U.S. mergers and acquisitions activity in China.

Left panel: Number of deals announced. This is a stacked bar chart with the y-axis measuring deal counts, ranging from -50 to 200. Three categories are displayed: "Divestments" (red bars, shown as negative values below zero), "Direct acquisitions" (blue bars), and "Hidden acquisitions" (light purple bars). A black line represents "Net acquisitions." The chart shows total deal counts peaked around 2006-2007 at approximately 200 deals, driven primarily by direct acquisitions. Through 2008-2010, total deals remained elevated at about 140-180 deals. After 2010, there is a general declining trend, with total deals fluctuating between approximately 50 and 130 deals through 2020. A notable increase occurs around 2020 to about 130 deals, followed by a sharp decline. By 2025, total deals drop to approximately 30 deals. Divestments remain relatively small throughout the period, typically ranging between -10 and -50 deals. The net acquisitions line follows the general trend of total deals, starting around 110 in 2005, peaking at approximately 170 in 2007, declining through the mid-2010s to about 20-50, rising briefly around 2020, and falling to approximately 20 by 2025.

Right panel: Value of completed deals. This is a stacked bar chart with the y-axis measuring billions of 2017 U.S. dollars, ranging from -5 to 20. The same three categories are shown: "Divestments" (red bars, negative values), "Direct acquisitions" (blue bars), and "Hidden acquisitions" (light purple bars), with a black line for "Net acquisitions." The total value shows significant volatility throughout the period. Values start at approximately 5 billion dollars in 2005, increase to about 10 billion dollars in 2006, and fluctuate between approximately 1 and 14 billion dollars through 2017. A dramatic spike occurs around 2019, reaching approximately 19 billion dollars, followed by a sharp decline and return to about 8 billion dollars by 2020-2021. By 2025, the total value decreases to approximately 1 billion dollars. Divestments show variability, with notable negative values around 2016 reaching about -5 billion dollars. The net acquisitions line tracks the overall volatility, showing the peak around 2019 at approximately 18 billion dollars and declining to near zero by 2025.

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Figure 4. Disposition of income from U.S.-to-China FDI

This is a line chart showing annual data from 2000 to 2025. The y-axis measures percent of income, ranging from 0 to 100 percent. Two variables are plotted: "Reinvestment rate" (black dashed line) and "Dividend payout rate" (red solid line).

The reinvestment rate starts at approximately 50 percent in 2000, fluctuates between about 50 and 60 percent through 2006, reaching approximately 60 percent around 2004. The rate dips to about 48 percent around 2008, then increases steadily throughout the 2010s. The reinvestment rate peaks at approximately 68 percent around 2015, then begins a sustained decline, falling to about 57 percent by 2018, continuing to decrease to approximately 50 percent by 2020, and dropping further to about 40 percent by 2025.

The dividend payout rate starts at approximately 48 percent in 2000 and fluctuates between about 40 and 50 percent through 2009. The rate declines to approximately 37 percent around 2010-2011, remains relatively low between 33 and 40 percent through 2017, with the lowest point around 32 percent in 2014. From about 2017 onward, the dividend payout rate increases steadily, rising from approximately 35 percent in 2017 to about 43 percent by 2019, continuing to increase to approximately 50 percent by 2021, and reaching about 60 percent by 2023-2024, where it remains through 2025.

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Figure 5. Investments and divestments by Chinese affiliates of U.S. Multinationals

This figure contains two related line charts showing annual data from 2003 to 2024.

Left panel: CapEx / PPE. This is a line chart with the y-axis measuring share of PPE, ranging from 0 to 0.8. Three variables are plotted: "Mean (Cap/Q)" (orange dashed line), "Median (Cap/Q)" (green solid line), and "Aggregate (BEA)" (black dotted line). The mean series starts at approximately 0.25 in 2003, increases to a peak of about 0.7 around 2007, then declines through 2012 to about 0.45. The series fluctuates between approximately 0.35 and 0.40 from 2013 to 2018, then increases to about 0.6 around 2021, before declining to approximately 0.3 by 2024. The median series starts at about 0.3 in 2003, increases to approximately 0.4 around 2006, remains relatively stable between 0.3 and 0.4 through 2011, then declines to about 0.12 around 2018. The series increases to approximately 0.35 around 2021, then declines to about 0.17 by 2024. The aggregate series starts at approximately 0.15 in 2003, increases to about 0.3 around 2007, fluctuates between 0.2 and 0.3 through 2014, then remains relatively stable between 0.15 and 0.2 through 2024.

Right panel: Divestments. This is a line chart with the y-axis measuring percent of reporting firms, ranging from 0 to 100 percent. Two variables are plotted: "Reported sales of PPE" (black dashed line) and "Reported negative PPE growth" (red solid line). The reported sales of PPE series starts at approximately 13 percent in 2003, increases to about 42 percent around 2006, fluctuates between approximately 35 and 47 percent through 2013, then generally increases to about 70 percent by 2021 before declining to approximately 65 percent by 2024. The reported negative PPE growth series starts at approximately 25 percent in 2003, remains relatively stable between 25 and 32 percent through 2012, with the lowest point around 18 percent in 2013. The series increases sharply from about 20 percent in 2013 to approximately 70 percent by 2017, declines to about 50 percent by 2018, then increases to approximately 60 percent by 2019. The series declines to about 33 percent by 2022 before increasing sharply to approximately 73 percent by 2024.

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