China Foreign Direct Investment Slides to Lowest Level on Record
(16 August 2023 – China) A key measure of new foreign direct investment in China fell to the lowest level in 25 years in Q2 2023.
Direct investment liabilities contracted to a mere US$4.9 billion in Q3 2023 according to figures released by the State Administration of Foreign Exchange, representing a dramatic slide of 87 percent year-on-year and the smallest value in any quarter stretching back to 1998.
The data print raised growing concerns about how much the economy’s sluggish economic growth post-pandemic and rising geopolitical tensions is negatively impacting business sentiment. The United States continues to advance the concept of "friend-shoring” and this week announced tighter regulations on technology investment in China such as semiconductors and artificial intelligence (AI).
The anti-espionage law broadening the scope of what is considered spying that went into effect in July triggered major concern among foreign companies about employees potentially becoming targets.
"There is growing concern that the revised anti-espionage law will restrict trade and investment” commented Dai-ichi Life Research Institute Chief Economist, Toru Nishihama.
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