The dark clouds of the trade war between China and the United States have yet to disperse. According to official figures released by the Chinese Communist Party, China’s actual use of foreign direct investment (FDI) in the first four months of this year amounted to 320.78 billion yuan, a decrease of 10.9% compared to the same period last year.
The Ministry of Commerce of the Chinese Communist Party announced on its official website on the 23rd that the actual use of foreign direct investment (FDI) in the first four months of 2025 was 320.78 billion yuan, showing a 10.9% decrease compared to the same period last year. The officials also noted that the drop in the actual use of foreign capital in April compared to March narrowed by 0.1 percentage point.
Following the announcement of reciprocal tariffs by the Trump administration on April 2nd, the Chinese Communist Party retaliated, escalating the trade war between the U.S. and China, impacting the foreign trade of both countries and further shrinking the Chinese economy.
From May 10th to 11th, representatives from the U.S. and China held talks in Switzerland. The U.S. agreed to reduce the additional tariffs on most Chinese goods from 145% to 30%, while China lowered retaliatory tariffs on U.S. products from 125% to 10%. The reduced tariff rates will be maintained for 90 days, during which both sides will continue negotiations to reach a broader agreement.
The current U.S.-China tariff war has only pressed the pause button, while issues such as fentanyl tariffs, semiconductor exports, critical mineral supplies, and structural conflicts on geopolitical security remain unresolved.
Foreign capital withdrawal from China in recent years has been evident. Data released by the Chinese Ministry of Commerce in January this year indicated that the actual use of foreign capital in China in 2024 was only 826.25 billion yuan, a significant decrease of 27.1% from the previous year, marking a historical low.
Citing data from the State Administration of Foreign Exchange of the Chinese Communist Party, Bloomberg estimated that in 2024, China experienced a net outflow of foreign direct investment of 1.2277 trillion yuan (approximately 168.4 billion U.S. dollars), reaching a historical high.
Professor Xie Tian from the Moore School of Business at the University of South Carolina in the United States previously mentioned to Dajiyuan that some of the data may have been inflated by the Chinese Communist Party, and are therefore misleading. The actual numbers regarding the use of foreign capital are likely worse than reported.
The Chinese Communist Party is intensifying efforts to stabilize foreign investment. In February this year, the Ministry of Commerce and the National Development and Reform Commission of the Chinese government announced the “2025 Action Plan for Stabilizing Foreign Investment,” introducing 20 specific measures including expanding pilot openings in fields such as telecommunications, healthcare, and education.
American economist David Huang stated earlier to Dajiyuan that the 20 measures to stabilize foreign investment are a typical emergency response, akin to treating symptoms rather than addressing the core concerns of foreign investors. Therefore, it is challenging to reverse the trend of continuous outflow of foreign capital from China and restore global investors’ confidence in the Chinese market.