Foreign investment in China falls to the lowest level in 30 years

Foreign direct investment (FDI) in China has declined to its lowest level in three decades, according to official data released by the State Administration of Foreign Exchange in February 2024. The sharp decline highlights growing concerns among foreign corporations over China's increasingly stringent regulations and the impact of U.S. sanctions, as Nikkei Asia reported on February 19, 2024.

In 2023, China's net FDI totalled a mere $33 billion, a staggering 80 per cent drop from the previous year. This marks the second consecutive year of decline, a significant fall from the peak of $344 billion recorded in 2021.

Despite the dismal overall figures, the final quarter of 2023 saw a slight improvement, with inflows surpassing outflows by $17.5 billion. This modest recovery followed the first-ever recorded net outflow in the previous quarter. However, the overall trend reflects a growing reluctance among foreign investors to commit to China, as geopolitical tensions and regulatory crackdowns cast a shadow over the investment landscape.