CK Hutchison Holdings shows how difficult the environment can be for companies caught in the crossfire. The deal to sell 43 ports to a consortium led by BlackRock for US$19 bil drew ire from China.

China has taken steps to restrict local companies from investing in the US, according to people familiar with the matter, in a move that could give Beijing more leverage for potential trade negotiations with the Trump administration.

Several branches of China’s top economic planning agency, the National Development and Reform Commission, have been instructed in recent weeks to hold off on registration and approval for firms that are looking to invest in the US, the people said, asking not to be identified discussing sensitive issues. 

While China has previously placed restrictions on some overseas investments for reasons linked to concerns about national security and capital outflows, the new measures underscore tensions playing out between the world’s two biggest economies as Donald Trump ramps up tariffs. China’s outbound investments into the US totaled US$6.9 billion in 2023, according to the latest available figures.

There’s no sign that existing commitments by Chinese companies in the US and elsewhere, or China’s purchases and holdings of financial products including US Treasuries, would be affected, the people said. It’s unclear what prompted the NDRC to halt the processing of applications or how long this suspension might last. 

The NDRC and the Ministry of Commerce, both in charge of initial approvals for companies’ foreign investment, didn’t immediately reply to a request for comment.

US equity futures dropped to session lows after the Bloomberg report. European stocks also extended their decline.

On Wednesday, Trump is set to unleash plans for so-called reciprocal tariffs on US partners, which will likely include China. A memorandum issued by the US president in February told a key government committee to curb Chinese spending on tech, energy and other strategic American sectors. 

China has already been increasing scrutiny of outbound investments by domestic companies after record capital outflows put pressure on the yuan, Bloomberg News reported earlier this year. 

While the latest restriction mostly applies to corporate investment in the US, the move adds uncertainty for firms that are seeking to shift production abroad to bypass the trade barriers and attempt to navigate an intensifying global standoff.

CK Hutchison Holdings shows how difficult the environment can be for companies caught in the crossfire. The Hong Kong-based conglomerate agreed to sell 43 ports, including two in Panama, to a consortium led by BlackRock for US$19 billion in cash proceeds last month. The deal drew ire from China, which told state-owned firms to pause any new collaboration with businesses linked to Li Ka-shing and his family, Bloomberg News reported last week.

The latest data from China’s Ministry of Commerce showed outbound investments into the US slumped 5.2% in 2023 despite an increase of 8.7% into all foreign countries. The cumulative stock of China’s investment in the US accounted for only 2.8% of the total at the end of 2023.

Domestic companies planning investment projects abroad are required to follow filing and approval procedures that usually involve the Ministry of Commerce, the NDRC and the State Administration of Foreign Exchange.