Foreign investors are attracting a record amount of money from China

(Bloomberg) — Foreign investors pulled a record amount of money out of China last quarter, reflecting deep pessimism about the world’s second-largest economy.

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China’s direct investment liabilities in the balance of payments fell by nearly $15 billion in the April-June period and fell by about $5 billion in the first six months of the year, according to data from the State Administration of Exchange released on Friday.

If this continues for the rest of the year, it would be the first net annual outflow since at least 1990, when comparable data began.

Foreign investment in China has fallen in recent years after reaching a record $344 billion in 2021. A slowing economy and rising geopolitical tensions have led some companies to reduce exposure, and China’s rapid shift to electric vehicles has also attracted foreign car companies. unskilled, causing some to withdraw or reduce their investments.

The fall comes despite Beijing’s increasing efforts to attract and retain foreign investment, after the smallest increase last year. The government wants to show it remains open and attractive to foreign business, hoping companies will bring advanced technology and resist pressure from the US and elsewhere to decouple from China.

SAFE data, which tracks net flows, can reflect trends in foreign companies’ profits as well as changes in the size of their operations in China. Multinationals have more reason to keep cash abroad than in China, as advanced economies have raised interest rates while Beijing cuts them to stimulate the economy.

Earlier Commerce Ministry figures showed new foreign direct investment in China in the first half of the year was the lowest since the pandemic began in 2020.

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