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Duowei News: Foreign Capital Withdrawal Sends Warning Signal to China’s Labor Market

Foreign investment is pulling out of the Chinese market and it is impacting the Chinese labor market. Foreign capital investment was US$121 billion in 2016, down 62.94 percent from 2011. Duowei News published an article on the subject, quoting data from the Ministry of Commerce. By, the end of December 2016, foreign investment companies in China employed more than 10 percent of the total labor force or 45 million direct laborers. According to figures that the National Bureau of Statistics released, foreign capital investment was US$121 billion in 2016, down 62.94 percent from US$327 billion in 2011. The total Outward Direct Investment (ODI) in 2016 reached US$170 billion, a historic high, up 44.1 percent compared to the same period last year; it exceeded Foreign Direct Investment (FDI) in the same time period. The article stated that each occurrence of capital investment withdrawal would result in a significant reduction in the labor force. The article listed a number of recent cases of companies leaving China. These include Oracle’s Research and Development division, Seagate Technology, and the Marks and Spencer department store. As to the reason for their leaving, the article mentioned that, in addition to an increase in the cost of production, an inability to adjust to China’s market, and the threat from the rise in domestic brands, four new trends were worth noting. The price of land increased sharply resulting in the foreign investment companies undergoing a cash buy out. Labor and commodity prices increased. The deflation of the Chinese yuan resulted in reduced profit margins. Trump’s policy is to attract more U.S. companies to return to the U.S.

Source: Duowei News, February 24, 2017