China’s foreign investment hits 30-year low in ’23

The foreign direct investment in China rose slightly by $33 billion in 2023, the smallest increase since the early 1990s, according to data from the State Administrations of Foreign Exchange cited by Bloomberg on Sunday.

China’s direct investment liabilities in its balance of payments decreased by 82 per cent compared to that of 2022. The data reflects the impact of Covid lockdowns and a weak recovery last year.

The investment fell in the Q3 of 2023 for the first time since 1998. Although it recovered slightly and returned to growth in the final quarter, the $17.5 billion in new money in that period was still a third lower than the same period in 2022.

The continuing weakness highlights how foreign companies are pulling money out of the country due to geopolitical tensions and higher interest rates elsewhere

A recent survey of Japanese firms in China showed that most of those companies cut investment or kept it flat last year, and a majority don’t have a positive outlook for 2024.

Direct investment into China by German companies reached a record of nearly €12 billion ($13 billion) last year, according to a German Economic Institute report based on data from the Bundesbank.