In 2024, China’s net outflow of foreign direct investment (FDI) reached a staggering $168.4 billion, marking the highest value recorded since 1990; while foreign investment in China was only $4.5 billion, the lowest since 1992.
On February 14, the State Administration of Foreign Exchange of the Chinese Communist Party released preliminary data on the balance of payments for the fourth quarter of 2024 and the whole year. Bloomberg estimated based on official data that the net outflow of foreign direct investment in 2024 reached $168.4 billion, setting a record high since 1990.
Foreign direct investment in China hit a historical peak of $344 billion in 2021, but has since entered a downward trend year after year.
Reports indicate that as foreign companies continue to withdraw their investments, Chinese enterprises are swiftly moving their capital overseas. Looking at the detailed data, in the past year China invested $172.8 billion overseas, while the amount of foreign investment flowing into China was only $4.5 billion, the lowest level since 1992.
The report states that as the United States and China enter a new round of trade war, more companies may be affected, and the Chinese government’s efforts to prevent capital outflows will face greater challenges.
In recent times, in response to the ongoing decline in foreign investment, the Chinese Communist government has promised to improve treatment, extend tax breaks, and provide visa exemptions in an attempt to attract foreign capital. However, the United Nations Conference on Trade and Development pointed out in a report that confidence in China from abroad is declining. Data shows that foreign direct investment in China dropped by 29% last year, significantly higher than the 2% decrease in investments in developing countries and the global 8% decrease.
According to a report by Nikkei Asia, based on official Chinese data, foreign direct investment in China has plummeted by 99% over the past three years, hitting a new low in 33 years. This is mainly attributed to the slowing Chinese economy and the intensification of what authorities call “anti-spying activities,” leading to a flurry of foreign companies withdrawing their investments.