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MNI: China Should Buoy Growth To Woo Hesitant FDI - Advisors

MNI (Singapore)
MNI (Beijing)

Foreign direct investment into China has fallen as Western firms "de-risk," interest rate spreads remain wide and manufacturing costs rise, advisors tell MNI.

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Warmer China-U.S. relations will not reverse the decline of foreign direct investment anytime soon, particularly in technology, and mainland authorities should pursue pro-growth policies to attract hesitant offshore capital especially as interest-rate spreads between the yuan and dollar remain wide, advisors told MNI.

Direct investment liabilities – a broad measure of FDI – reached minus USD11.8 billion in Q3, the metric's first-ever quarterly deficit, data published by the State Administration of Foreign Exchange showed in November. The negative result suggests foreign companies are likely pulling money from China instead of reinvesting. In Q3 2022, the measure stood at USD13.1 billion. Actual foreign capital used, or realised FDI, fell 9.4% y/y over the first 10 months, extending the decline noted since June, Ministry of Commerce data showed.

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Warmer China-U.S. relations will not reverse the decline of foreign direct investment anytime soon, particularly in technology, and mainland authorities should pursue pro-growth policies to attract hesitant offshore capital especially as interest-rate spreads between the yuan and dollar remain wide, advisors told MNI.

Direct investment liabilities – a broad measure of FDI – reached minus USD11.8 billion in Q3, the metric's first-ever quarterly deficit, data published by the State Administration of Foreign Exchange showed in November. The negative result suggests foreign companies are likely pulling money from China instead of reinvesting. In Q3 2022, the measure stood at USD13.1 billion. Actual foreign capital used, or realised FDI, fell 9.4% y/y over the first 10 months, extending the decline noted since June, Ministry of Commerce data showed.

Keep reading...Show less