China Jan-Mar Foreign Direct Investment Fell 26.1% On Year to CNY301.67 Billion

Foreign direct investment into China dropped in the first three months of the year, underscoring the difficulty for Beijing to attract global investors despite its recent charm offensives.

China attracted 301.67 billion yuan worth of foreign direct investment in the January-March period, according to data provided by the Ministry of Commerce.

This marks a 26.1% decline compared with the same period last year, widening from the year-on-year 19.9% fall seen in the first two months. The ministry said the latest data was dwarfed by the record high of FDI in the same period a year earlier.

Foreign investment into the world's second-largest economy started to decline last year amid rising geopolitical tensions and China's uncertain economic outlook. In 2023, China's FDI dropped 8.0% from a year earlier in yuan terms. It stopped releasing data in dollar terms last year.

Beijing has rolled out a slew of measures to lure foreign businesses since last year, pledging to provide a fair and open business environment for them. However, many companies, especially those from the U.S. and the EU, have had a sense of promise fatigue after years of disappointment. Concerns over a sweeping anti-espionage law, along with uncertainties stemming from exit bans and raids on consulting firms, have further dented the mood.

"Surveys of foreign firms in China over the last few years show a marked drop in the share planning to raise investment there, although sentiment did improve slightly in 2023," said economists at Oxford Economics in a note this week.

The number of newly established foreign-funded enterprises reached 12,086 in the first quarter, up 20.7% on year. 12.5% of the foreign investment went into China's high-tech manufacturing sector in the January-March period, and investments from German and ASEAN in the first quarter climbed 48% and 5.8% respectively, according to the ministry.

China's non-financial outbound investment rose 12.5% to 242.92 billion yuan in the first quarter, said the ministry. Chinese investment in ASEAN and the EU jumped in the period, at growth rates of 36.7% and 34.5% respectively.

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April 19, 2024 08:00 ET (12:00 GMT)

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