Foreign investors pulled a record amount of money from China in the second quarter of 2024, likely reflecting deep pessimism about the world’s second-largest economy. Bloomberg reports.
As the media outlet notes, citing the State Administration of Foreign Exchange (Safe), China’s direct investment liabilities in its balance of payments dropped almost $15 billion in the April to June period, marking only the second time this figure has turned negative. It was down about $5 billion for the first six months.
Should the decline continue for the rest of 2024, it would be the first annual net outflow since at least 1990, when comparable data begins.
As Bloomberg reports, foreign investment into China has slumped in recent years, after hitting a record $344 billion in 2021.
The slowdown in the economy and rising geopolitical tensions have led some companies to reduce their exposure, and the rapid shift to electric vehicles in China also caught foreign car companies off guard, prompting some to withdraw or scale back their investments.
The fall comes despite Beijing’s growing efforts to attract and retain foreign investment, following the smallest increase on record in 2023.
Meanwhile, experts say, multinationals have more reason to keep cash abroad than in China, as advanced economies have been raising interest rates while Beijing has been lowering them to stimulate the economy.
The media outlet notes that Chinese outbound investment also hit a record, with firms sending $71 billion overseas in the second quarter, a rise of more than 80 percent from the $39 billion in the same period in 2023.
Chinese companies have been rapidly stepping up investment, with money going into projects such as electric vehicle and battery factories.
