Half of Japanese companies invested in China expect the economy to get worse this year, according to a new survey, and the vast majority do not plan to increase investment.
About 50 percent of the 1,741 Japanese companies surveyed by the Japanese Chamber of Commerce and Industry in China said that they expected the economy to get worse this year, an increase from the 37 percent who said that at the end of last year.
Another 34 percent said China’s economy would perform this year the same as it did last year, with only 15 percent of firms expecting it to improve.
Photo: AFP
China’s economy grew faster than 5 percent in the first three months of the year, but that does not seem to have encouraged companies to step up investment. About 44 percent of the surveyed firms said they would cut outlays this year, and another 40 percent planned to keep them unchanged. Those numbers were broadly unchanged from the survey at the end of last year.
The continued pessimism from Japanese firms bodes poorly for Beijing’s efforts to attract foreign firms back after the COVID-19 pandemic.
The flow of investment into China from the rest of the world fell 56 percent in the first quarter from a year earlier, according to official data released last week.
The amount from Japan dropped 1.2 percent to the lowest level for the first quarter in comparable data back to 2014.
The survey conducted from mid-March to the middle of last month did not provide a margin of error.
Japan is the most important single source of investment for China, accounting for about 6 percent of the total stock of foreign direct investment into the nation in 2021, according to a report by academics including Bert Hofman, previously the head of the World Bank’s office in China.
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