US and European firms are shifting investment away from China to other developing markets, a report from Rhodium Group showed, with India receiving the vast majority of this redirected foreign capital, followed by Mexico, Vietnam and Malaysia, reports Reuters. These companies are turning their backs on the world’s second-largest economy even as its share of global growth continues to increase, highlighting how concerns over China’s business environment, economic recovery and politics weigh heavy on the minds of foreign investors.
The value of announced US and European greenfield investment into India shot up by some $65 billion or 400% between 2021 and 2022, Wednesday’s report said, while investment into China dropped to less than $20 billion last year, from a peak of $120 billion in 2018.
“Diversification is well underway,” the research organisation said, but acknowledging: “it will take years for advanced economies to achieve the objectives behind their ‘de-risking’ policies,” as China is so central to global supply chains.
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