In 2024, as factors such as the continuous slowing down of the economy in Mainland China continue to have an impact, foreign direct investment in China decreased by $14.8 billion in the second quarter of the year, with the withdrawal of foreign investment reaching a historical high.
Data released by the State Administration of Foreign Exchange of the People’s Republic of China on Friday, August 9th, revealed that foreign direct investment in China decreased by $14.8 billion in the second quarter of this year and by about $5 billion in the first half of the year.
According to Bloomberg, foreign investment in China, which reached a record high of $344 billion in 2021, has been declining in recent years. The continuous slowdown of the Chinese economy and geopolitical tensions have accelerated the pace of foreign capital withdrawal from China.
Earlier data released by the Ministry of Commerce of the People’s Republic of China showed that foreign direct investment in the country hit a new low since the outbreak of the COVID-19 pandemic in 2020 in the first half of this year.
Meanwhile, China’s outbound investment hit a historical high. Chinese enterprises invested over $71 billion overseas in the second quarter of this year, representing an increase of over 80% compared to the same period last year.
In recent years, Chinese companies have been increasing their investments overseas, putting funds into new projects such as electric vehicles and battery factories.
The latest data from the State Administration of Foreign Exchange also shows that the abnormal indicator measuring China’s trade surplus continues to grow, reaching a record $87 billion in the second quarter.
According to Nikkei News, in the second quarter of this year, the amount of funds flowing out of China for factory construction and mergers and acquisitions (M&A) exceeded the inflow. This marks the second instance of negative growth since statistics began in 1998, with capital outflows surpassing the $12.1 billion seen in the period from July to September in 2023.
In the spring of 2022, the Chinese Communist Party imposed strict lockdown policies in cities like Shanghai, plunging the Chinese economy into chaos. Foreign direct investment in Mainland China saw a significant drop from $107.2 billion in the first quarter of that year to $37.8 billion in the second quarter of 2022.
Currently, the Chinese economy remains sluggish, with trends of overseas multinational corporations withdrawing funds, including from entities in China, strengthening. In the second quarter of this year, these companies saw a net outflow of $22 billion from China, marking a new high since comparable data has been available since 1998.