Foreign investment in China has fallen by more than $14.8 billion, according to the latest data. This decline is between April and June this yeardespite attempts by Xi Jinping’s government to maintain foreign investment in China.
According to The Telegraph, this is the second time since Data collection began in 1998and represents a huge difference from the $10 billion that was pumped into the country in net terms in the first three months of the year.
Overall, China recorded a record net outflow of direct investment of $86 billion. Foreign direct investment in China was negative was in the fall of 2023, when investors withdrew $12 billion. Chinese companies also invested a record $71 billion abroad between April and June, an 80% increase from the previous year.
This decline in foreign direct investment is one of the symptoms of the slowdown of the Chinese economy, which is in a stagnant phase after years of development and rapid growth. It is also a consequence of geopolitical tensions. a domestic economy in crisisthe falling value of the Chinese yuan and low interest rates. These factors have become reasons for foreign companies not to make direct investments in China.
In addition to the problems of foreign investment, there is a tendency among the Chinese population to save. Domestic consumption has also declined significantly in recent months. Behind this is the Chinese real estate crisis, which has severely impacted the real estate marketAt the centre of this situation is Evergrande, China’s largest real estate developer, which went bankrupt, leading to government intervention.
China’s investments outside its borders are increasing
According to Firstpost, the increase is mainly focused on projects such as electric vehicles and battery factories. Large Chinese companies invest in offshoring some of their production processes, as is the case with many new factories in Latin America.
Data from China’s foreign exchange administration also revealed a growing discrepancy in the measurement of China’s trade surplus, which hit a record $87 billion in the second quarter and was nearly $150 billion in the first half of the year. This discrepancy was highlighted earlier this year by the US Treasury Department, which pressed China to explain the significant differences in trade figures.
