Foreign direct investment (FDI) in China has seen a sharp decline during the first seven months of 2024, with a staggering drop of 29.6% compared to the same period in 2023. According to data released by China’s Ministry of Commerce and reported by Financial Experts Blog, the total FDI reached just 539.47 billion yuan, or approximately $75.3 billion, as of July.
This significant downturn reflects growing concerns among international investors regarding China’s economic prospects. A considerable portion of the remaining investments, over 154.5 billion yuan, was directed towards China’s manufacturing sector, highlighting its enduring appeal despite the broader economic challenges.
Interestingly, the data also reveals a surge in investments from Germany and Singapore, both of which bucked the overall trend. Germany increased its investments by 26.4% year-over-year, while Singapore saw an 11% rise. These increases stand in stark contrast to the overall decline and suggest that some regions still view China as a viable investment destination.
In spite of the overall drop in FDI, the number of new foreign-funded enterprises in China grew by 11.4%, surpassing 31,650 by the end of July. This growth may indicate that while the total volume of investment has decreased, the interest in establishing a presence in the Chinese market remains strong among certain international investors.
The steep decline in foreign investment comes at a time when China is grappling with a slowing economy, increasing geopolitical tensions, and an uncertain global economic outlook. The future trajectory of foreign investment in China remains to be seen, but these figures suggest that significant challenges lie ahead.