Due to investor anxiety and growing pessimism caused by China’s economic slowdown, money has been pulled out of the nation. Recent startling investment data, which indicates that foreign investors withdrew a record $15 billion from China in only the most recent quarter (April–June 2024), is evidence of this.
According to the State Administration of Foreign Exchange’s most recent statistics, China’s balance of payments’ direct investment obligations decreased by about $15 billion in the April–June quarter—only the second time the amount went negative.
In the first half of the year, it lost almost $5 million. According to a Bloomberg article, this would be the first yearly net outflow since comparable statistics were available, assuming the decrease in investment levels persists for the remainder of the year.
After reaching a record $344 billion in 2021, foreign investment in China has decreased in the following years.
According to data previously made public by China’s Ministry of Commerce, the amount of fresh foreign direct investment (FDI) that entered the nation in the first half of 2024 was at its lowest level since the pandemic’s beginning in 2020.
In addition to the economic downturn, growing geopolitical tensions have caused international investors to become less optimistic about China.
In addition, global automakers’ curiosity has been piqued by China’s abrupt transition to electric cars, or EVs, with some withholding or reducing their investments.
In contrast to Beijing, which has been decreasing interest rates to boost its economy, advanced nations provide higher interest rates. Multinational corporations now have good reasons to withdraw their money from China and invest elsewhere where higher returns are promised. Chinese firms invested $71 billion overseas in the second quarter, setting a new record for outbound investment. This is more than eighty percent more than the $39 billion invested in the same time last year.