Datanomics: Love-hate relationship between the two largest economies

Foreign direct investment by China into the US and job creation by their MNEs in each other's economy have also been declining recently

From the Nixon-Mao meeting in 1972 and the US’s official recognition of China in 1979 to the recent trade war and the Trump-Xi meeting, economic relations between Washington and Beijing have seen both — bonhomie and hostility. Foundation of what we see as China today — an economic might — was essentially laid by multinational enterprises (MNEs), particularly from the US, and economic reforms initiated by the Deng Xiaoping regime in 1979. From the world’s eighth-largest in 1970,  China toppled Japan in 2010 as the world’s second-largest economy. The US has had a deficit in goods and services trade with China since at least 1999, even though its imports fell to a 16-year low and exports hit a 10-year bottom in 2025, partly due to the trade war. Foreign direct investment (FDI) by China into the US, and job creation by their MNEs in each other’s economy, have also been declining recently. This highlights the importance of the latest meeting. However, US FDI into China in 2025 was the highest in at least 27 years.