Radio Free Asia (RFA) reported that China’s Ministry of Commerce  has released data on foreign direct investment (FDI) in China. Nationwide FDI was RMB 987.01 billion for the first ten months of this year, a year-over-year decrease of 9.4 percent. The decline expanded from the 8.4 percent over the previous nine months, and was the fifth consecutive month of continuous decline.

Foreign investors are pulling more money out of China than they put in. This is happening through repatriation of profits, repayment of intra-company loans, and the sale of assets. The trend reflects that foreign businesses are disillusioned with China’s economic prospects and policy climate.

Some analysts expressed the belief that Xi Jinping’s national security policy has caused a large-scale flight of foreign capital, and that the situation will be difficult to change in the short term. With national security remaining Beijing’s top priority, the downward trend in foreign investment will likely not change any time soon, even if the Chinese government were to launches a gesture promoting foreign investment. China currently faces many economic challenges in many areas, including taxation, technological upgrades, rapid withdrawal of foreign investment, a surge in unemployment, stagnant growth, and decline in international cooperation. These are all dangerous signals regarding the Chinese economy.

China’s high-tech, medical equipment and high-end instrument industries are not doing too poorly in terms of foreign direct investment. Investment into the service industry, however, has taken a big hit, declining by 15.9 percent. The service industry is responsible for more of the country’s employment and accounts for a greater share of GDP than China’s manufacturing sector.

Just a short while ago, China announced that third-quarter foreign investment (in U.S. dollars) was negative for the first time, with a deficit of US$11.8 billion. Meanwhile, the most recent announcement by China’s Ministry of Commerce reported a positive number for foreign direct investment, denominated in RMB. Although calculation using RMB resulted in a positive number, actual U.S.-dollar-denominated foreign direct investment has been negative. The Chinese Ministry of Commerce has not released FDI data measured in U.S. dollars since August this year.

Source: RFA, November 20, 2023
https://www.rfa.org/mandarin/yataibaodao/jingmao/hx1-11202023101220.html

China is the world’s largest manufacturer and exporter of cell phones, but exports have declined steadily from a 2015 peak of 1.343 billion units to 822 million units in 2022 – a drop of 521 million units over 7 years. Chinese media have conceded that “cell phone exports may never reach that peak again.”

According to China’s General Administration of Customs, October 2023 cell phone exports were 81.11 million units, up 10% year-over-year, but total 2023 exports in the first 10 months were down 6.4% to 642 million units. The continued export decline is largely due to falling global cell phone demand – Counterpoint research shows global smartphone shipments dropped from a 2017 peak of 1.55 billion units to 1.2 billion units in 2022 as consumers slow their upgrade cycle.

Another factor driving the decline is major brands like Samsung and Apple moving production out of China after 2014. Samsung has moved much of its production to Vietnam, Apple to other locales. This coincided with Chinese electronics manufacturing companies Xiaomi, Vivo and Oppo actively expanding overseas production bases since 2015 – notably in India and Indonesia, which have become major alternative sites. Vivo and Oppo now operate major factories in India with 60-72 million unit capacities.

Reasons for shift away from cell production in China include the rising cost of Chinese labor as well as import restrictions and tariffs by countries like India and Indonesia creating incentives for localized production in those countries.

Source: Central News Agency (Taiwan), November 19, 2023
https://www.cna.com.tw/news/acn/202311190142.aspx

According to China’s 2023 Statistical Yearbook, the number of first marriages in China in 2022 was 10.51 million, a 9.16% drop compared to 2021. This is the first time in years that first marriages have fallen below 11 million. The peak was in 2013 with 23.85 million first marriages; the number has dropped 55.9% over 9 years.

Dong Yuzheng, a demographic researcher affiliated with Guangdong provincial government, analyzed several factors contributing to this decline. These include:

• The number of young people of marriageable age is decreasing.
• As the population ages, willingness to marry is weakening among some groups.
• The number of people not getting married is gradually rising.
• Some marriages were postponed from late 2022 to 2023 due to the epidemic, impacting last year’s numbers.

Reasons why young people today are less likely to want marriage include: (1) changing perception of the stability of marriage, (2) changing views around obligation to get married / have children, and (3) rising costs of married life.

The decline in first marriages will lead to lower fertility rates. According to Yi Fuxian, an expert on China’s population and a senior researcher at the University of Wisconsin-Madison, China’s demographic structure means that China’s economy will likely never surpass that of the U.S. He called on Beijing to face up to China’s declining population and civilization.

Source: Central News Agency (Taiwan), November 20, 2023
https://www.cna.com.tw/news/acn/202311200149.aspx