Foreign Investment to China Drops to Lowest Level. Foreign investment into China in 2023 experienced the lowest increase since the early 1990s. A number of countries appear to be reducing their investment in the Bamboo Curtain country.
The decline in foreign direct investment (FDI) highlights China’s challenge to seek more investment from abroad to boost the economy. According to data from the State Administration of Foreign Exchange (SAFE) on Sunday (18/2), China’s direct investment obligations in the balance of payments will reach US$33 billion in 2023, or around IDR 515 trillion.
The amount of new foreign investment into China, which records the flow of money connected to foreign entities in China, was 82% lower than the 2022 levels and the lowest since 1993.
Foreign Investment to China Drops to Lowest Level. The data reflects the impact of Covid lockdowns and a weak recovery last year. Investment decreased in the third quarter of 2023, before recovering slightly to grow in the fourth quarter of 2023.
According to economists, data from SAFE measuring net flows can reflect profit trends of foreign companies as well as changes in the size of their operations in China. According to data from the National Bureau of Statistics, profits of foreign industrial companies in China fell 6.7% last year.
Then, preliminary figures from the Ministry of Commerce also showed new foreign direct investment into China fell in 2023 to the lowest level in three years. Economists say the Trade Ministry figures do not include reinvested earnings from existing foreign companies and are less volatile than SAFE figures.
On the other hand, there are more incentives for multinational companies to keep cash abroad than in China. This is because developed countries have raised interest rates when China cut them to stimulate the economy.
