Foreign investment in China has worst mark in 18 years

FDI (Foreign Direct Investment) in China recorded the lowest value in 18 years in the 2nd half of 2022. There were US$ 42.5 billion (R$ 221 billion at current exchange rates) invested in the country from July to December, a decrease of 73% in the year, the most accentuated since 1999, according to the Chinese Ministry of Commerce.

The period marked an intensification of diplomatic tension with the United States and market uncertainty regarding the growth of the Chinese economy with the policy of “covid zero”, which prolonged the sanitary restrictions and affected the country’s industrial production. The information is from the newspaper Nikkei Asia.

On average, in the 4 semesters from the end of 2020 to the beginning of 2022, foreign direct investment in China used to be US$ 160 billion (R$ 832 billion).

Effectively invested FDI, which includes reinvested earnings, dropped 35% year-on-year in the last 3 months of 2022, to US$33.8 billion. It was the worst performance since 1996.

Consulting data Rhodium Group also indicate a drop in the volume of new European companies entering China and a retention of investments from those that remained due to concerns about suspected technology theft and industrial espionage.

Disclosure/Rhodium Group

A survey by the Rhodium Group shows that, over the last 20 years, European investment in China has become concentrated in 4 countries: Germany, the United Kingdom, France and the Netherlands.

Distrust of the Chinese government has led these companies to prioritize the installation of factories and production chains in Southeast Asian countries, such as Thailand, Taiwan and Vietnam, in addition to Japan.

Despite this, Chinese companies invested 21% in projects outside the country, with US$ 84.2 billion (R$ 438 billion).

Part of these contributions make up the New Silk Road (Belt and Roadas it is known in English), investment initiative and bilateral agreements with more than 140 countries in the world –including 19 in Latin America and the Caribbean– in power plants, railways, highways and ports, in addition to telecommunications networks, such as 5G .

The last balance sheet of the Chinese government (complete – 117 KB, in English) shows that US$ 11.87 billion was invested in 3,048 New Silk Road projects in the 1st half of 2022. The main recipients of the projects were Singapore, Indonesia, Pakistan, Malaysia, United Arab Emirates, Thailand, Vietnam, Cambodia, Laos and Bangladesh.