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Venture capital flows between China and the US surpass direct investment for the first time – CNBC 

Our Take: The shift in proportion between venture capital investment (VCI) and foreign direct investment (FDI) is another example of how the U.S.-China trade war has impacted the two countries. It is important to recognize that during the last year, VCI flows increased, while FDI decreased, further driving the difference between them. It remains to be seen if China’s drop in FDI flows into the U.S. will negatively affect U.S. businesses in the long run, but many states and industries are already concerned. Nevertheless, it is a clear reflection that while firms are still willing to take investment risks, there is less incentive to invest in direct ownership during constant policy uncertainty. 

US-China trade war is a gift that keeps on giving for Vietnam – SCMP  

Our Take: Vietnam has been a refuge for multinational companies trying to shift away from China and offset losses from U.S. tariffs on Chinese goods. Even prior to the trade war, Southeast Asia had begun positioning itself as an alternative to an increasingly saturated China manufacturing space– where wages were rising. Now, the trade war has provided strong push factors towards Vietnam, allowing the nation to build infrastructure and technical capacity.   There is also an increase from Vietnamese investors to fund business ventures in the United States, potentially taking advantage of opportunities missed from Chinese investment. Firms looking to avoid U.S.-China uncertainty can look to Vietnam as both a short-term solution as well as a potential long-term partner in overseas ventures. 

Sequoia China to cut up to 20 percent of investment staff as tech growth slows – Reuters 

Our Take: Sequoia Capital is often regarded as an indicator of technology investment health in China. These cuts reflect a general trend in China’s tech industry, as other tech firms have cut staff in recent months. This may indicate that the China tech industry is reaching saturation or is effected by the U.S.-China trade war. Top Chinese firms are slowly downsizing to meet the lower growth of the Chinese economy. With the end of the U.S.-China trade war again in question, it appears that investment has slowed in China. If firms believe that the downsizing reflects U.S. impacts rather than China market saturation, it may take this period as an opportunity to enter China as established firms receive less support this year.   

Trump Says China Trade Deal Is Possible as Tariff Hike Nears – Bloomberg 

Our Take: China and the United States both want a deal. China has subdued direct criticism of U.S. President Trump in domestic media and Trump continues to indicate that there is a light at the end of the tunnel. This may be last-minute negotiation tactics, but it is likely that the United States will raise tariffs and businesses should start taking precaution now. If this talk ends up being a bluff, expect a sweeping round of public praises from both sides but only a marginal reduction in the current tariffs. Regardless of the trade outcome, it is unlikely there will be an immediate easing of tensions in the U.S.-China business environment. 

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Analyst Bio’s

Michael Tian: Michael Tian is currently a Junior at Brown University concentrating in International Relations and Economics with a focus on East Asia. Dedicated to understanding the global economy and its effects on inter-state relations, Michael seeks to promote mutual cooperation and foster cultural ties across cultures and space by developing informed and objective publications in both policy and academia. 

Edits by Kelli Sullivan

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