China lost a record USD 15 billion of foreign investment last quarter. According to the media reports, if the decline continues through 2024, it would be the first annual net outflow of cash since at least 1990.
According to the latest data released by the State Administration of Foreign Exchange, the direct investment liabilities in China’s balance of payments fell almost USD 15 billion in the April-June quarter, only the second time the figure turned negative.
It was down about USD 5 billion for the first six months. According to the media reports, foreign investment in China has slumped in recent years after hitting a record USD 344 billion in 2021.
The figures released earlier by China’s Ministry of Commerce showed that new foreign direct investment (FDI) into the country in the first half of 2024 was the lowest since the start of the pandemic in 2020.
The slowdown in the economy and increasing geopolitical tensions have led some companies to reduce their exposure and the rapid shift to electric vehicles in China also caught foreign car companies off guard.
Meanwhile, according to the experts multinationals have more reasons to keep cash abroad than in China, as advanced economies have been raising interesting rates while Beijing has been lowering them to stimulate the economy.
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