Over the past year, China has experienced a record outflow of foreign direct investment, which may worsen amid a renewed trade war with the United States. About this informs Bloomberg.
According to the State Administration of Foreign Exchange Control of the People’s Republic of China, the net outflow of capital from the country amounted to 168 billion dollars – the largest figure since 1990. The total level of foreign investment fell sharply after a record $344 billion in 2021. Chinese investors took 173 billion dollars abroad, while the inflow of foreign capital into China was only 4.5 billion.
The drop in investment comes amid escalating trade tensions between China and the US, including increased tariffs and investigations into companies such as Google and Apple. The slowdown of the economy and the growth of geopolitical risks forced some international companies to review their investment plans.
China’s transition to electric vehicle production has also influenced the decisions of foreign automakers, which have reduced their investments in the country. Lower interest rates in China prompted companies to hold capital abroad, while some investment fell due to debt repayments and repatriation of profits.
Overall, foreign investment in China fell by 29%, while the drop in developing countries was only 2%. Japanese companies, which have traditionally been among the main investors in China, did not increase their investments, but instead refocused on the US market.
