China’s Jan-March foreign investment inflows down 26%

Foreign direct investment into China shrank 26.1% in the first quarter from a year earlier, following a contraction of 8% in 2023, official data showed on Friday, underscoring challenges facing Chinese authorities to win back foreign firms.

Foreign direct investment (FDI) totalled 301.7 billion yuan ($41.66 billion) in January-March, the commerce ministry said. The investment rose 41.7% from the fourth quarter of 2023, it added.

Chinese officials have been stepping up efforts to attract investors, with Premier Li Qiang vowing to keep up efforts to improve the business environment and welcome investment from foreign businesses.

Foreign investors are concerned about a broader new anti-espionage law, exit bans, and raids on consultancies and due diligence firms.

Foreign investment in China’s manufacturing industry in the first three months reached 81.1 billion yuan, accounting for 26.9% of total FDI, the ministry said.

Foreign investment in China’s accommodation and catering industry soared 84.7% year-on-year, while that in the construction industry rose 17.5%, and investment in the wholesale and retail industry rose 2.2%, it said.

The ministry did not say which sectors saw year-on-year declines.
Source: Reuters (Reporting by Ella Cao and Ryan Woo, Editing by David Goodman and Mark Potter)