• China has halted approvals for outbound investments by domestic companies into the US since April 2025, according to sources familiar with the matter.
  • The move coincides with reciprocal tariff hikes, including US duties on Chinese imports rising to 145% and China's retaliatory 125% tariffs on US goods.
  • The freeze signals deepening economic decoupling, disrupting corporate expansion plans and supply chain integration.

Investment Freeze as Trade Weapon

China’s National Development and Reform Commission (NDRC) and local governments have quietly suspended greenlights for new or expanded US investments by Chinese firms, according to three people briefed on the policy. The undeclared moratorium—first implemented in April—aligns with Washington’s sweeping tariff increases on EVs, semiconductors, and critical minerals.

"This isn’t just tit-for-tat; it’s strategic containment," said a Shanghai-based investment banker who requested anonymity due to client sensitivities. "Beijing is choking off capital flows to sectors where the US seeks dominance." The banker noted pending deals in US logistics and battery manufacturing have been indefinitely stalled.

Ripple Effects Across Industries

Early casualties include a major automaker’s $800M Kentucky EV plant and a semiconductor materials supplier’s Texas expansion. US commercial real estate markets, particularly in tech hubs like Austin and Seattle, may face headwinds as Chinese capital recedes. Meanwhile, Chinese firms are reportedly diverting earmarked US funds to Southeast Asia and the EU.

A spokesperson for China’s Commerce Ministry declined to confirm the policy shift when contacted but stated, "All outbound investments undergo rigorous national security reviews." The US Treasury Department has not responded to requests for comment.

The Decoupling Accelerates

With bilateral trade volumes already down 18% year-to-date, the investment freeze compounds fractures in what was once a $700B economic relationship. Analysts warn the restrictions could outlast current trade negotiations. "When capital stops flowing, supply chains calcify," said Mei Xinyu, a researcher at China’s Academy of International Trade. "Rebuilding these links will take years—if it happens at all."

Correction: An earlier version misstated the US tariff rate on Chinese EVs. The correct figure is 145%, not 125%.