Foreign Investment Flows into China Shrink 19.9% in January-February

REUTERS/Tyrone Siu
A man walks along the waterfront in front of Victoria Harbour, with the iconic skyline buildings as a backdrop, in Hong Kong, China June 28, 2023.

BEIJING (Reuters) – Foreign investment flows into China shrank 19.9% in January-February from a year earlier to 215.1 billion yuan ($30 billion), data from the commerce ministry showed on Friday, even as the government gears up to woo foreign firms.

China’s cabinet on Tuesday unveiled new steps to arrest a slowdown in foreign investment, including expanding market access and relaxing some rules.

Overseas firms have turned sour on China since it enacted ultra-strict COVID curbs during the pandemic then suddenly abandoned them in late 2022, with concerns over the business environment, a shaky economic recovery and rising geopolitical tensions with the West weighing on confidence.

A series of prolonged regulatory crackdowns on sectors from technology to education have also rattled domestic and foreign investors, adding to unease over policy transparency in China.

U.S. Commerce Secretary Gina Raimondo said last year that American businesses had told her that China was becoming “uninvestible.”

In 2023, foreign direct investment into China shank 8% year-on-year.

Of the foreign investment in the first two months, 71.44 billion yuan, or a third of the total, went into China’s high-tech industries, including high-tech manufacturing, the ministry said.

Foreign investment in China’s construction sector rose 43.6% year-on-year, while investment in wholesale and retail industries grew 14.5%, it added.

($1 = 7.2270 Chinese yuan)