China recorded its weakest FDI inflows in 30 years last year. Investors have been deterred by weakening economic growth, an uncertain business environment and, in part, lower interest rates compared with other countries. Beijing is also struggling to attract foreign capital because of strained relations with the West. This is according to the Nikkei Asia news website.
Huge slump
Foreign direct investment last year reached $33 billion in net terms, according to the local foreign trade administration. That was about 80 percent less than in 2022.
The figure is positive because new investment outweighed outflows. However, foreign direct investment fell for the second year in a row, reaching less than ten percent of the $344 billion peak recorded in 2021.
Between October and December, foreign investment inflows exceeded outflows by $17.5 billion. The previous quarter saw the first ever net outflow of investment.
Security
China has been struggling to attract investment, workers and technology from abroad since the late 1970s, when Deng Xiaoping began opening up the economy and reforms. But foreign firms are now limiting their Chinese activities as the Chinese government has become more focused on protecting national security, including cracking down on espionage. Authorities have tightened control over research companies that conduct market analysis and other activities, and there have also been reports of foreign firms detaining employees, according to media reports.
source: ČTK
