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Main article: Economy of China
2024
$15 billion reduction in foreign direct investment in Q2
In the second quarter of 2024, foreign investors withdrew $15 billion from China. During the same period, Chinese firms invested a record $71 billion abroad.
At the same time, German direct investment in China has grown sharply, companies ignore calls from their government to diversify into other, "less geopolitical risky markets."
Investments amounted to €2.48 billion in the first three months of 2024, increasing to €4.8 billion in the second quarter. Thus, the total investment for the first half of 2024 reached €7.3 billion, compared with €6.5 billion for the entire 2023.
Foreign direct investment in China at the beginning of the year is at a high level
2023
Massive flight of foreign investors from China for two years
From the beginning of 2022, against the background of the armed conflict in Ukraine, a large-scale closure of investment positions of non-residents in the Chinese jurisdiction began.
In 2022-2023, the net closure of non-resident monetary operations in China amounted to $132 billion, compared to net lending of $254 billion in 2020-2021 and inflows of $78 billion in 2018-2019.
Net sales in the portfolio investment segment amounted to $95 billion in 2022-2023 vs an inflow of portfolio investments of $424 billion in 2020-2021 and + 308 billion in 2018-2019.
Net inflows by direct investment (the main channel of foreign capital inflows to China) amounted to 233 billion in 2022-2023, compared with + 597 billion in 2020-2021 and + 423 billion in 2018-2019.
As a result, the net inflow of foreign capital was actually zeroed (+ 6 billion in two years) vs inflows at the level of $1.3 trillion in 2020-2021 and 0.8 trillion in 2018-2019.
On average, the net inflow of foreign capital to China for all financial accounts was about $0.5 trillion per year (if we estimate the 5-year trend), at the beginning of 2024 we are talking at best about zero.
There was once a negative investment cycle in China (2015-2016), when the net inflow of foreign capital in two years decreased to 156 billion with a strong outflow in 2015 at 100 billion, but since the beginning of the 1980s there has not yet been a near-zero investment flow to China in two years.
Regarding the capacity of the financial system and cross-border turnover, in 2022-2023 the lowest net flow of investment capital to China in history was recorded in at least 60 years.
This cannot be due to economic reasons, the main motives are concentrated on the political track (aggravation around Taiwan, support for Russia in the conflict in Ukraine, general degradation of political relations with the United States).
The geopolitical factor costs China about $500-700 billion a year, Spydell Finance wrote.
Growth in direct investment in China from Germany
Germany's direct investment in China rose 4.3% to a record high of 11.9 billion euros ($12.7 billion) in 2023. The data confirms that German firms continue to invest heavily in China, despite government calls for them to cut investment in that country.
The indicator of foreign investment in Q3 became negative for the first time since the beginning of accounting in 1998
The indicator of foreign investment in China in the third quarter of 2023 became negative for the first time since the start of accounting in 1998.
This indicates that foreign companies are withdrawing money from the country due to geopolitical tensions and rising interest rates in other countries.
2022
From 2020 to 2022, foreign investor interest in China declined rapidly. Communist Party of China COVID-19 China 2022 is the worst because of politics in the fight against. Investors are reorienting the flows of money from to new enterprises in,,, and Vietnam Thailand Indonesia India other Asian countries.
2021: U.S. Direct Investment Structure for Manufacturing Assets in China
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