Foreign corporate investment in China seen collapsing

The Chinese Renminbi may continue to weaken as foreign direct investment in China declines as a result of animosity from the Chinese government and a deteriorating domestic economy, according to several economists. From $400 billion in yearly direct investment in 2020 to $20 billion in 2023, this decline reflects a substantial worsening in global corporations’ perceptions of China.

The major downturn in the Chinese economy, the government’s growing hostility towards foreign businesses, the increase in political risk, the US and European sanctions against China, and the possibility of greater tariffs on Chinese goods in the US and Europe are all blamed for this fall.

Population ageing and slowing productivity growth are likely to blame for China’s waning appeal to global businesses. Due to the decrease in direct foreign investment, foreign corporations are transferring their investments to Southeast Asia and India, which is promoting growth in these regions.