Foreign direct investment in China fell by 26.1% in the first quarter of 2023, amounting to 301.7 billion yuan or 41.7 billion USD. This is the weakest first quarter since 2020, according to data released by the Chinese Ministry of Commerce. The decline in foreign investment capital has been gradual over the past three months, decreasing from 113 billion yuan in January to 102 billion yuan in February and 90 billion yuan in March.
Ji Xiaofeng, an official at the Ministry of Commerce, attributed the drop partly to a high base in the same period last year. However, compared to the fourth quarter of 2023, foreign investment capital in China increased by 41%, and the investment structure improved.
Speaking at the Boao Forum for Asia last month, deputy director of China’s foreign exchange administration Xu Zhibin stated that China’s foreign direct investment developments were “basically in line with global trends.” Despite this, China is making efforts to attract more investors, as seen in Premier Li Qiang’s pledge at the China Development Forum in Beijing in March to improve the business environment and implement reforms in key areas to create a “more open China” and collaborate with the world.
In response to declining foreign investment, Beijing announced measures on April 19 to promote foreign investment. These include support for foreign organizations to issue bonds in yuan domestically and loosening restrictions on foreign strategic investments in Chinese listed companies. Additionally, Beijing is encouraging foreign technology companies to raise funds through bond issuance and creating favorable conditions for foreign investors to participate in Chinese technology companies. The country also plans to approve foreign investment in Chinese stocks and bonds efficiently.