Net capital inflows into the U.S. = U.S. trade deficit. The balance of payments is simply: Sales of assets – Purchases of assets = Purchases of goods – Sales of goods
If you balance the trade, it means foreigners must stop investing into the US.
What's the issue, if me, an Italian, own land in Indiana or North Cali?
1) The foreign entity is investing where Americans aren't.
2) There is a very huge risk for the foreign entity to own such an operation because of political changes. By law or decree the US or the state can always nationalize these lands.
Thus, ultimately, I see no issue there.
2. I think this represents a misunderstanding of the U.S. Constitution and U.S. law. The Constitution provides no power for the federal government to acquire land without just compensation, which courts have regularly held to mean fair market value. Put another way: The feds can likely devise a path for buying your land, but can't outright nationalize it. Changing that is not a matter of presidential decree or even a law by Congress; it would require an amendment to the Constitution itself, which is an extraordinarily heavy political and policy lift.
Proportionately, perhaps, but that doesn't mean by value of assets owned. It just means the aggregate value of assets in the US will be less.
You think zero sum like accountant or land owner.
They money coming is invested for opportunities. There will be less opportunities for startups, less VC money. Less affordable loans for corporations to expand and invest.
Like what is the sound logic here?
As an Italian I would love more foreign ownership of Italian businesses, that would not only bring capital but more scrutiny.
Capital investments are like credit card spending, feels good for a while, but ultimately outwards-capital value should always exceed inwards-capital value (that's why somebody makes an investment).
Sometimes everybody is better off (the ideal founder story with VC investment) but all too often the investment money is stolen or misused (but the debt remains for the country to repay).
The 1MDB investments didn't help Malaysia:
US investment bank Goldman Sachs helps 1MDB sell bonds worth $3.5bn... Goldman Sachs helps 1MDB raise a further $3bn in an additional bond sale, this time to cover “new strategic economic initiatives” between Malaysia and Abu Dhabi
On other hand the economy overall and stock market especially have enormously increased due to outside investments. As injection of money in later one directly pushes valuations up. And the borrowing is only possible when someone loans money...
If we agree that that's a bad thing, then it stands to reason that there's a certain point where foreign ownership becomes a bad thing.
I think China has done an excellent job of bringing in foreign investment while keeping those foreign investors from running amok.
Which to be clear will be largely domestic oligarchs and other whales since the vast majority of domestic citizens in the US don't have enough capital to own any significant amount of assets, US or otherwise.
Speaking to the middle class, home ownership (traditionally one of the most reliable sources of wealth for the middle class) would increase.
A perpetuation of this transfer will lead to major trouble. To understand why, take a wildly fanciful trip with me to two isolated, side-by-side islands of equal size, Squanderville and Thriftville. Land is the only capital asset on these islands, and their communities are primitive, needing only food and producing only food. Working eight hours a day, in fact, each inhabitant can produce enough food to sustain himself or herself. And for a long time that’s how things go along. On each island everybody works the prescribed eight hours a day, which means that each society is self-sufficient.
Eventually, though, the industrious citizens of Thriftville decide to do some serious saving and investing, and they start to work 16 hours a day. In this mode they continue to live off the food they produce in eight hours of work but begin exporting an equal amount to their one and only trading outlet, Squanderville.
The citizens of Squanderville are ecstatic about this turn of events, since they can now live their lives free from toil but eat as well as ever. Oh, yes, there’s a quid pro quo–but to the Squanders, it seems harmless: All that the Thrifts want in exchange for their food is Squanderbonds (which are denominated, naturally, in Squanderbucks).
Over time Thriftville accumulates an enormous amount of these bonds, which at their core represent claim checks on the future output of Squanderville. A few pundits in Squanderville smell trouble coming. They foresee that for the Squanders both to eat and to pay off–or simply service–the debt they’re piling up will eventually require them to work more than eight hours a day. But the residents of Squanderville are in no mood to listen to such doomsaying. Meanwhile, the citizens of Thriftville begin to get nervous. Just how good, they ask, are the IOUs of a shiftless island? So the Thrifts change strategy: Though they continue to hold some bonds, they sell most of them to Squanderville residents for Squanderbucks and use the proceeds to buy Squanderville land. And eventually the Thrifts own all of Squanderville.
At that point, the Squanders are forced to deal with an ugly equation: They must now not only return to working eight hours a day in order to eat–they have nothing left to trade–but must also work additional hours to service their debt and pay Thriftville rent on the land so imprudently sold. In effect, Squanderville has been colonized by purchase rather than conquest. It can be argued, of course, that the present value of the future production that Squanderville must forever ship to Thriftville only equates to the production Thriftville initially gave up and that therefore both have received a fair deal. But since one generation of Squanders gets the free ride and future generations pay in perpetuity for it, there are–in economist talk–some pretty dramatic “intergenerational inequities.”
Source: https://www.berkshirehathaway.com/letters/growing.pdf
In reality people in Thriftville invest money in Squanderville and that money grows new sectors other than manufacturing while the share of manufacturing as GDP declines everywhere.