Foreign direct investment in China dropped by 27.9% in the first four months of this year compared to the same period last year, reaching 360.2 billion yuan ($49.74 billion USD). This decline indicates that the measures taken by the Chinese Communist Party to attract foreign capital have not been effective in the midst of economic downturn, making it difficult to reverse the situation.
According to data released by the Ministry of Commerce of the CCP on Friday (May 24), foreign direct investment inflows into China in April amounted to only 58.5 billion yuan, lower than 86.6 billion yuan in March, marking the lowest monthly record since November last year.
During the pandemic, foreign direct investment into China continued to grow, but it experienced an 8% decline in 2023. The CCP government has been trying to reverse this trend for some time. In March this year, the CCP announced a series of measures to “enhance foreign investors’ confidence in investing in China,” including expanding market access and relaxing visa regulations. However, foreign investors have expressed that while the CCP makes many promises to improve the business environment for foreign investors, actions have been limited.
A recent survey by the European Chamber of Commerce found that only 15% of respondents believe China is currently their top investment choice, while 13% consider China as their future investment destination. Both figures have hit historical lows.
The same survey also revealed that 39% of surveyed companies are most concerned about China’s economic slowdown. Official data released last week shows that weak domestic demand and ongoing issues in the real estate sector pose challenges to the CCP government’s growth target of around “5% this year”.
According to the Ministry of Commerce of the CCP, investments from Spain and Germany surged by 263% and 34.7%, respectively, in the period from January to April this year. Approximately 12.7% of these investments, totaling 45.7 billion yuan, were directed towards high-tech manufacturing in China.