Foreign businesses’ direct investment into China last year increased by the lowest amount since the early 1990s, underscoring challenges for the nation as Beijing seeks more overseas investment to help its economy.
China’s direct investment liabilities in its balance of payments rose by US$33 billion last year, 82 percent down on 2022, according to data from the State Administration of Foreign Exchange (SAFE) released yesterday. That measure of new foreign investment into the country — which records monetary flows connected to foreign-owned entities in China — slumped to the lowest level since 1993.
The data shows the effect of the COVID-19 lockdowns and weak recovery last year. The investment fell in the third quarter of last year for the first time since 1998. Although it recovered a little and returned to growth in the final quarter, the US$17.5 billion in new money in that period was still a third lower than the same period of 2022.
Photo: Alex Plavevski, EPA-EFE
SAFE’s data, which gauges net flows, can reflect trends in foreign company profits, as well as changes in the size of their operations in China, according to economists. Profits of foreign industrial firms in China dropped 6.7 percent last year from the prior year, according to National Bureau of Statistics data.
Earlier figures from the Chinese Ministry of Commerce showed new foreign direct investment into China fell last year to the lowest level in three years. The ministry’s figures don’t include reinvested earnings of existing foreign firms and are less volatile than the SAFE figures, economists have said.
The continuing weakness highlights how foreign companies are pulling money out of the country due to geopolitical tensions and higher interest rates elsewhere.
There’s rising attractiveness to multinationals of keeping cash overseas rather than in China, because advanced economies have been raising interest rates, while Beijing has been cutting them to stimulate the economy. A recent survey of Japanese firms in China showed most of those companies cut investment or kept it flat last year, and a majority don’t have a positive outlook for this year.
The government’s efforts to get overseas companies to return after the pandemic are falling short, and more will be needed if Beijing is to succeed in its aims.
There are some bright spots. Direct investment into China by German companies reached a record of nearly €12 billion (US$13 billion) last year, according to a German Economic Institute report based on data from the Bundesbank.
That demonstrates an eagerness to expand in the world’s No. 2 economy even while the European Union steps up scrutiny of these investments because of security concerns. Investment in China as a share of Germany’s total direct investment abroad expanded to 10.3 percent last year — the highest since 2014, the report showed.
In Italy’s storied gold-making hubs, jewelers are reworking their designs to trim gold content as they race to blunt the effect of record prices and appeal to shoppers watching their budgets. Gold prices hit a record high on Thursday, surging near US$5,600 an ounce, more than double a year ago as geopolitical concerns and jitters over trade pushed investors toward the safe-haven asset. The rally is putting undue pressure on small artisans as they face mounting demands from customers, including international brands, to produce cheaper items, from signature pieces to wedding rings, according to interviews with four independent jewelers in Italy’s main
Japanese Prime Minister Sanae Takaichi has talked up the benefits of a weaker yen in a campaign speech, adopting a tone at odds with her finance ministry, which has refused to rule out any options to counter excessive foreign exchange volatility. Takaichi later softened her stance, saying she did not have a preference for the yen’s direction. “People say the weak yen is bad right now, but for export industries, it’s a major opportunity,” Takaichi said on Saturday at a rally for Liberal Democratic Party candidate Daishiro Yamagiwa in Kanagawa Prefecture ahead of a snap election on Sunday. “Whether it’s selling food or
CONCERNS: Tech companies investing in AI businesses that purchase their products have raised questions among investors that they are artificially propping up demand Nvidia Corp chief executive officer Jensen Huang (黃仁勳) on Saturday said that the company would be participating in OpenAI’s latest funding round, describing it as potentially “the largest investment we’ve ever made.” “We will invest a great deal of money,” Huang told reporters while visiting Taipei. “I believe in OpenAI. The work that they do is incredible. They’re one of the most consequential companies of our time.” Huang did not say exactly how much Nvidia might contribute, but described the investment as “huge.” “Let Sam announce how much he’s going to raise — it’s for him to decide,” Huang said, referring to OpenAI
The global server market is expected to grow 12.8 percent annually this year, with artificial intelligence (AI) servers projected to account for 16.5 percent, driven by continued investment in AI infrastructure by major cloud service providers (CSPs), market researcher TrendForce Corp (集邦科技) said yesterday. Global AI server shipments this year are expected to increase 28 percent year-on-year to more than 2.7 million units, driven by sustained demand from CSPs and government sovereign cloud projects, TrendForce analyst Frank Kung (龔明德) told the Taipei Times. Demand for GPU-based AI servers, including Nvidia Corp’s GB and Vera Rubin rack systems, is expected to remain high,
RSS