Foreign investment into China fell 19.9% in the the first two months of 2024 from the amount in January-February last year to 215.1 billion yuan ($30 billion).
That figure, announced by the Commerce ministry on Friday, comes at a time when the government is making considerable effort to woo foreign firms.
China’s on Tuesday unveiled new steps to arrest the dramatic slowdown in foreign investment, including expanding market access and relaxing some rules.
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Overseas firms have turned sour on China after it enacted ultra-strict curbs during the Covid-19 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 also rattled domestic and foreign investors, adding to unease over policy transparency in China.
A vague but stringent anti-espionage law implemented by the Xi Jinping government last year also weighed on business sentiment amid increasing raids, fines and exit bans being imposed on foreign firms and their workers.
US Commerce Secretary Gina Raimondo warned last August that American businesses had told her that China was becoming “uninvestable“.
And last month, data released by the State Administration of Foreign Exchange (SAFE) showed that China’s direct investment liabilities — a measure of net inflow of foreign capital into the country — stood at $33 billion in 2023.
That meant foreign direct investment into China shrank 80% year-on-year to a three-decade low.
Of the foreign investment in the first two months of this year, 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 said.
- Reuters with additional input and editing by Jim Pollard
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