(Bloomberg) — Foreign companies pulled more money out of China last quarter, a sign that some investors remain bearish even as Beijing rolls out stimulus measures aimed at stabilizing growth.
Bloomberg’s Most Read
China’s direct investment liabilities in its balance of payments fell by $8.1 billion in the third quarter, according to data from the State Administration of Foreign Exchange released late Friday. The indicator, which measures foreign direct investment in China, fell almost $13 billion during the first nine months of the year.
Foreign investment in China has plummeted over the past three years after hitting a record in 2021, a victim of geopolitical tensions, pessimism about the world’s second-largest economy and stronger competition from domestic Chinese companies in industries such as the automotive. If the decline continues through the rest of the year, it would be the first annual net outflow of FDI since at least 1990, when comparable data are available.
Companies that have withdrawn some operations in China this year include automakers Nissan Motor Co. and Volkswagen AG, along with others such as Konica Minolta Inc. Nippon Steel Corp. said in July it would exit a joint venture in China, while that International Business Machines Corp. is closing a hardware research team in the country, a decision that affects about 1,000 employees.
The prospect of an expanded trade war and deteriorating relations with Beijing during US President-elect Donald Trump’s second term may further weigh on the investment. “Geopolitical tension” is the main concern of members of the American Chamber of Commerce in Shanghai, according to the group’s president, Allan Gabor.
“It makes it difficult to plan large investments, but on the contrary, we see many members making small and medium-sized investments,” Gabor said in an interview with Bloomberg TV last week during the China International Import Expo. “It’s a much more surgical investment environment.”
Still, the government’s efforts in late September to stimulate the economy have already benefited a group of foreign investors, with the value of stocks held by foreigners rising more than 26% since August, according to separate central bank data. China’s benchmark stock index gained nearly 21% in September after the start of a coordinated stimulus effort, although it has since given up some of those gains.