Foreign investors pulled out a record amount of capital from China during the second quarter of 2024, reflecting significant pessimism about the world's second-largest economy. According to data from the State Administration of Foreign Exchange (SAFE) released on August 9, China's direct investment liabilities fell by nearly US$15 billion (S$19.9 billion) from April to June, marking only the second instance of a negative figure in this category. For the first half of the year, the drop totalled about US$5 billion.&nbsp;

If this trend continues for the remainder of 2024, it would represent the first annual net outflow of foreign investment since data collection began in 1990. Investment flows into China have been declining since peaking at a record US$344 billion in 2021. Factors contributing to this downturn include a slowing economy, escalating geopolitical tensions, and a sudden shift towards electric vehicles, which has unsettled foreign automotive firms and led to reduced or withdrawn investments.&nbsp;

This decline occurs despite Beijing's ongoing efforts to attract and retain foreign capital, following the smallest increase in foreign investment on record in 2023. The Chinese government aims to demonstrate that the country remains open and appealing to foreign businesses, hoping to attract advanced technologies while countering international pressure to decouple from China.&nbsp;

SAFE's data, which reflects net flows, can indicate trends in foreign companies' profits and operational changes in China. Higher interest rates in advanced economies versus lower rates in China have led multinationals to keep more cash abroad.&nbsp;

In contrast, Chinese outbound investment surged to a record US$71 billion in the second quarter, up over 80 per cent from US$39 billion in the same period of 2023. Chinese firms are increasingly investing in projects such as electric vehicle and battery factories.&nbsp;

Additionally, China's trade surplus anomaly has expanded, reaching a record US$87 billion in Q2 and nearly US$150 billion for the first half of 2024. The discrepancy in trade figures, highlighted earlier by the US Treasury, has been attributed to differing methodologies in recording exports and imports, according to the International Monetary Fund.

Foreign investors pulled out a record amount of capital from China during the second quarter of 2024, reflecting significant pessimism about the world's second-largest economy.

Foreign investors pulled out a record amount of capital from China during the second quarter of 2024, reflecting significant pessimism about the world's second-largest economy. According to data from the State Administration of Foreign Exchange (SAFE) released on August 9, China's direct investment liabilities fell by nearly US$15 billion (S$19.9 billion) from April to June, marking only the second instance of a negative figure in this category. For the first half of the year, the drop totalled about US$5 billion. If this trend continues for the remainder of 2024, it would represent the first annual net outflow of foreign investment since data collection began in 1990. Investment flows into China have been declining since peaking at a record US$344 billion in 2021. Factors contributing to this downturn include a slowing economy, escalating geopolitical tensions, and a sudden shift towards electric vehicles, which has unsettled foreign automotive firms and led to reduced or withdrawn investments. This decline occurs despite Beijing's ongoing efforts to attract and retain foreign capital, following the smallest increase in foreign investment on record in 2023. The Chinese government aims to demonstrate that the country remains open and appealing to foreign businesses, hoping to attract advanced technologies while countering international pressure to decouple from China. SAFE's data, which reflects net flows, can indicate trends in foreign companies' profits and operational changes in China. Higher interest rates in advanced economies versus lower rates in China have led multinationals to keep more cash abroad. In contrast, Chinese outbound investment surged to a record US$71 billion in the second quarter, up over 80 per cent from US$39 billion in the same period of 2023. Chinese firms are increasingly investing in projects such as electric vehicle and battery factories. Additionally, China's trade surplus anomaly has expanded, reaching a record US$87 billion in Q2 and nearly US$150 billion for the first half of 2024. The discrepancy in trade figures, highlighted earlier by the US Treasury, has been attributed to differing methodologies in recording exports and imports, according to the International Monetary Fund.

Foreign investors withdraw record amounts from China in June quarter

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Foreign investors withdraw record amounts from China in June quarter