News Brief

Foreign Direct Investment Into China Declines For 12th Consecutive Month Amid Escalating Tensions With The West

Kuldeep Negi

Jun 25, 2024, 03:16 PM | Updated 03:16 PM IST

Chinese President Xi Jinping. (Lintao Zhang/Getty Images)
Chinese President Xi Jinping. (Lintao Zhang/Getty Images)

China's foreign direct investment (FDI) continued its downward trend in May, marking the twelfth consecutive month of declines, according to official data released by the Chinese Ministry of Commerce.

From January to May, China attracted 412.51 billion yuan ($56.81 billion) in FDI, a 28.2 per cent decrease compared to the same period last year.

This follows a 27.9 per cent drop recorded in the first four months of the year.

The metric has been falling since June 2023.

The Chinese Ministry of Commerce reportedly attributed the wider decline primarily to a high comparison base from the previous year, adding that the actual scale of foreign investment remains at a historically high level.

The Ministry said that authorities have increased efforts to attract foreign investment since the beginning of the year, aiming to counteract the historic decline in overseas flows amid concerns about the country's diminishing growth prospects.

"Currently, the expectations and confidence of foreign investors are generally stable," the ministry stated, The Wall Street Journal reported.

The continued fall in FDI comes amid escalating tensions between China and Western countries.

Trade relations have soured due to punitive measures, including higher tariffs on Chinese electric vehicles imposed by the US and the European Union.

In response, Beijing has launched an anti-dumping investigation into pork imports from the EU.

China's leadership has made efforts to boost foreign investors' confidence and stabilise foreign investment flows.

In February, Premier Li Qiang emphasised stabilising foreign investment as a key focus for the year’s economic agenda, pledging to expand market access and improve the environment for fair competition.

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Kuldeep is Senior Editor (Newsroom) at Swarajya. He tweets at @kaydnegi.

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