TriOrient Investments’ Post

EXCERPTS: Foreign companies pulled more money from China last quarter, a sign that some investors are still pessimistic even as Beijing rolls out stimulus measures aimed at stabilizing growth. China’s direct investment liabilities in its balance of payments dropped $8.1 billion in the third quarter, according to data from the State Administration of Foreign Exchange released late Friday. The gauge, which measures foreign direct investment in China, was down almost $13 billion for the first nine months of the year. Foreign investment into China has slumped in the past three years after hitting a record in 2021, a casualty of geopolitical tensions, pessimism about the world’s second-largest economy and stronger competition from Chinese domestic firms in industries such as cars. Should the decline continue for the rest of the year, it would be the first annual net outflow in FDI since at least 1990, when comparable data begins. By contrast, outbound investment from China has been rising sharply. In the third quarter, Chinese firms increased their overseas assets by about $34 billion, according to the preliminary data from SAFE. That took outflows so far this year to $143 billion, the third-highest total on record for the period.

FDI News: Foreign investment flows to China decline 20% in January-February- Republic World 🌟 Discover the latest in the world of FDI and Business! Check out this insightful piece. 💡🌍 China foreign investment slows: Foreign investment flows into China contracted by 19.9 per cent in January-February compared to the same period last year, totalling 215.1 billion yuan ($30 billion), data released by commerce ministry showed on Friday. The decline comes amid efforts by the Chinese government to attract foreign firms, despite the downward trend in investment.China's cabinet recently announced new measures aimed at revitalising foreign investment, which include expanding market access and relaxing certain regulations. However, overseas companies have grown increasingly cautious about investing in China, citing concerns over the business environment, an uncertain economic recovery, and escalating geopolitical tensions with Western countries.The abrupt shift in China's COVID-19 containment measures, from stringent controls to sudden relaxation in late 2022, has also contributed to the erosion of investor confidence. Furthermore, ongoing regulatory crackdowns across various sectors, ranging from technology to education, have added to the unease among both domestic and foreign investors, raising questions about policy transparency in China.Gina Raimondo, the US Commerce Secretary, highlighted last year that American businesses had expressed reservations about investing in China, describing the country as 'uninvestible'.In 2023, foreign direct investment (FDI) into China recorded an 8 per cent year-on-year decline.Breaking down the investment figures for the first two months of the year, the ministry revealed that a significant portion, approximately 71.44 billion yuan, or one-third of the total, flowed into China's high-tech industries, including high-tech manufacturing.Despite the overall decline, certain sectors saw positive growth. Foreign investment in China's construction sector surged by 43.6 per cent year-on-year, while investment in wholesale and retail industries experienced a 14.5 per cent increase, according to the ministry's data.(With Reuters inputs) 🔗 [Learn more: https://lnkd.in/ekeBhYg6] Join as a Partner and Professional: FDI Alliance: www.fdialliance.com #FDI #Invest #Trade

#China has seen an outflow of #foreigninvestment at home and an increase in its own external investment so far this year during its trade war against the #UnitedStates and #Europe. China’s direct investment liabilities, an indicator of incoming foreign investment, fell by US$14.8 billion in the second quarter of this year, according to the latest data released by the State Administration of Foreign Exchange (SAFE). In the first half of this year, China’s #foreigndirectinvestment (#FDI) fell 29.1% to 498.9 billion yuan (US$69.5 billion) from the same period of last year, the Ministry of Commerce said last month. The country’s overseas direct investment (ODI) increased 16.6% to US$72.62 billion. #WorldEconomy #WorldOutlook #GlobalRivalry #GlobalOutlook #CorporateStrategy #BusinessStrategy #Strategy #Geostrategy #Geopolitics #GeopoliticalRisks #Politics #WorldPolitics #WorldAffairs #GlobalAffairs #ForeignRelations #ForeignAffairs #ForeignPolicy #InternationalRelations #InternationalAffairs #TechWar #TradeWar #EconomicWar https://lnkd.in/gHvuWVp8

My latest with Zhuowen Li on the shrinking FDI inflows in China - According to China's balance of payment data, net FDI inflows in the first half of 2024 turned negative, suggesting foreign firms might have repatriated more earnings back home than adding to new investments in China. This continuous decline in FDI inflows is driven by multiple factors, including geopolitics, divergence in monetary policy paths between China and most other major economies, China's gloomy outlook, and perhaps also the authorities' growing obsession with security. What is making things worse is the authorities' ongoing crackdown on access to Chinese data, which is making it more difficult for investors, both domestic and foreign, to make decisions. Will China's new (and coming) stimulus measures be enough to convince foreign investors to return? https://lnkd.in/ege_ruvz

A good study that addresses the question of the “organic internationalization” of the Chinese economy and its companies. But it only scratches the surface of the subject and remains in the realm of observations and the validation of data, which are themselves subject to caution. In the future, we'll be talking not just about manufacturing, but about services, as the study suggests when it highlights the shift from large-scale, prestige projects to smaller ones creating local jobs. The needs inherent in overseas greenfield investments will generate Chinese ecosystems in all service categories. To find out more about how China's public and private players will play in foreign markets, read the State Council's new directive on trade in services dated September 2, and the attached negative list. China's approach to trade in services duplicates that of manufacturing goods, as it prepares to bunkerize its domestic market for the types of services it will later develop internationally. China calls this new phase of its open door policy, the third of its kind, “unilateral opening” or "high level opening up". Welcome to China's "new economic environment" (pattern) (新发展格局) https://lnkd.in/dbxFDxpu

https://lnkd.in/gurnu2VM. The bad news is that #FDI flows into #China "plummeted 56% in the first quarter of this year YOY" while the good news is that flows exceeded outflows in the period. Economic situation and political situation in China; #geopolitical situation; etc. all at work. Nikkei Asia #economicgrowth #USChinarelations #semiconductors #antiespionagelaw #politicalrisk #regulatoryrisk

China is becoming a capital exporter with outbound FDI reaching record levels in 2023 since data has been kept since 2003. You won’t read much about this in the mainstream press; it runs counter to the narrative of a collapsing economy evidenced by capital flight (declining foreign investment into China). Recall six months or so ago all the talk was about the 2023 drop in net FDI in China. There was plenty of technical accounting considerations in what was actually going on, but the outbound data clearly points to a new set of dynamics for Chinese industry. #china #fdi

https://lnkd.in/gDZpUwhF China’s economy faced a storm of challenges in November 2024 as its capital markets saw unprecedented outflows. Official data revealed that foreign investors were pulling out in droves, amplifying concerns about the nation’s economic trajectory. #economy #markets #stockmarkets #china #tradewars #inflation #deflation #yuan #chineseyuan #CapitalMarkets

This is a good read to understand the National Savings and Investment Identity Principle in action, and what it really means when a nation has trade deficit. In short, trade deficits encourages foreign investments. And that is the conundrum the German economy is facing. As China buys more, German companies reinvest more in the country. #Economics #Trade #Economy

"FDI movement into China from January to March was 301 billion yuan (US$41.6 billion), down 26 per cent from last year according to official numbers released last Friday." Ignore the 26% decline. "While the FDI change from the first quarter was a 41.7 per cent increase over the last quarter of 2023, the data for March showed slower growth compared to the first two months of the year." While Beijing hailed a reported gross domestic product growth of 5.3 per cent over the same period as an indication its economy is in stable recovery, notable figures in the field said firms are staying cautious for several reasons." Well, the article states 2 reasons: 1. US companies are working to wall off their China ops and this is creating distance in HQ (as there is one more layer of management) - out of sight, sound; out of mind. 2. The returns are not likely to be promising as China will prioritise local SOEs, local companies ahead of the foreign companies in new and emergent areas that they would want to be 'self-reliant'. (This can be done in many ways: 'fairly', 'openly' on the tender, but local companies may enjoy 'off the tender' support for example.) And the best part - is that CCP keeps touting economic growth of 5.3% as the reason for investing in China; when it is the expected returns on investment that is key factor. So if the returns are below a certain threshold, they will not invest more. But if 5.3% economic growth is all you can offer, then 5.3% mantra is what you are going to get. "The ministry, which has not published FDI figures in US dollar terms since last year, said the first quarter decline was due to a high baseline from the same period in 2023." Foreign companies are not pulling out but holding fire.