Foreign direct investment (FDI) flowing to Shanghai grew at a slower-than-expected pace in the first half of 2023, adding to evidence that the mainland’s financial and commercial hub is losing its allure as a regional hub for multinational companies, reports the South China Morning Post. The city, dubbed the “dragon head” of China’s economy, received foreign funds worth $12.78 billion from January to June, up 7.1% on year, mainly due to a low base in 2022 when a citywide COVID-19 lockdown severely disrupted manufacturing and commercial activities.
Economists had expected the country’s emergence from strict pandemic lockdown measures in January to spur a big year-on-year jump in FDI, with some estimates for growth topping 20%.
“FDI was seen as a major growth driver for the local economy in this year’s first half,” said Ding Haifeng, a consultant at financial consultancy Integrity in Shanghai. “The numbers fall short of expectations and show that foreign businesses are taking a cautious stance on the local, and broader Chinese economy.”