Foreign investment in China continued on its downward slope in the April-June quarter, reaching the lowest level on record, reports Nikkei Asia. Direct investment by foreign companies in China in the second quarter totaled $4.9 billion, an 87% decrease on the year, the largest drop since 1998 when comparable data first became available, according to figures released this month by the State Administration of Foreign Exchange of China.
In addition to concerns about the US-China technology standoff, doubts about China’s willingness to open up more to the outside world are also hindering cash flows into to the country. If decoupling with the West due the drop foreign investment continues, the effect could be felt beyond the Chinese economy to throughout the world.
The drying up of foreign cash is not new. FDI in China has dropped by more than 50% since the April-June quarter of last year. China’s strict zero-COVID policy, which locked down commercial hub Shanghai for large parts of last year, increased foreign uncertainty and contributed to the loss of investment momentum.