China foreign investment inflows fall in first three quarters as high-tech sector grows

China foreign investment inflows fall in first three quarters as high-tech sector grows
China's investment shift

China is reporting another decline in foreign investment inflows during the first nine months, even as the pace of contraction eases from earlier in the year. Outbound non-financial direct investment reaches $101 billion, while high-tech industries stand out with stronger inbound capital growth.

Highlights

  • China's foreign investment inflows fell 4.3% year on year to 548.8 billion yuan ($82.2 billion) in the first three quarters of 2023.
  • Foreign investment in China's high-tech industries surged 33.8% from January to September, led by research, development and design services.
  • Officials cite worsening geopolitical conflicts, weak growth momentum, and rising protectionism as ongoing challenges to foreign capital attraction.

Investment data and sector trends

As reported by Reuters, citing China's commerce ministry, foreign investment flows into China fall 4.3% year on year to 548.8 billion yuan, or $82.2 billion, in the first three quarters. The ministry says outbound non-financial direct investment totals $101 billion over the same period.

The decline in foreign investment narrows from the 5.3% drop recorded in the first eight months, based on ministry data. That suggests inbound capital conditions remain weak, but the rate of deterioration is easing.

High-tech industries provide a stronger area within the broader picture, with foreign investment surging 33.8% in January to September. Research, development and design services lead that growth, according to a vice commerce minister speaking at a press briefing.

Pressure on China's capital appeal

Chinese officials say the country faces several headwinds in attracting foreign capital, including worsening geopolitical conflicts, weak growth momentum, and rising protectionist and unilateral measures.

The data points to an uneven investment environment for the world's second-largest economy, where broader foreign capital inflows remain under pressure even as technology-related segments continue to draw interest.

In our earlier coverage of China’s third-quarter growth outlook and policy support, we noted that economists expected a slight pickup in GDP growth but still near the low end of Beijing’s annual target range. The report highlighted late-September stimulus steps such as targeted rate cuts, mortgage subsidies, and the use of unused local government debt quotas, while stressing that solid exports were offsetting weak consumption, private investment, and ongoing property-sector strains.

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