China’s Ministry of Commerce reported that foreign direct investment (FDI) in China in the first half of 2023 decreased by 29.1% year-on-year, totaling 498.91 billion yuan (US$68.6 billion). However, the number of newly established foreign-invested enterprises increased by 14.2%.
Manufacturing sector FDI accounted for 28.4% of total FDI, up 2.4 percentage points from the previous year. High-tech manufacturing FDI made up 12.8% of the total. Investments from Germany and Singapore increased by 18.1% and 10.5%, respectively.
Despite strict COVID-19 control measures, China’s FDI had been strong in recent years, setting records from 2019 to 2021. However, the country’s economic recovery post-pandemic has been slower than expected, with growth rates of 3% in 2022 and 5.2% in 2023.
Analysts suggest that China’s slowing economic growth leaves less room for large-scale foreign investments. Many U.S. tech companies and investors have withdrawn, citing factors such as increased labor costs, slower growth rates, supply chain risks highlighted by the pandemic, and political risks.
The unpredictability of Chinese government policies is also deterring foreign investment. Recent crackdowns on industries like education, entertainment, and gaming have caused losses for companies in these sectors, making long-term investments less attractive to foreign entities seeking policy stability.
Source: Central News Agency (Taiwan), July 14, 2024
https://www.cna.com.tw/news/acn/202407140082.aspx