China records lowest foreign investment on record, experts blame new laws for stifling much-needed growth

foxbusiness.com:

Josh Birenbaum, deputy director for the Center on Economic and Financial Power at the Foundation for Defense of Democracies, discusses why trading partners find it increasingly difficult to do business in and with Beijing.

The Chinese economy recorded the first period of negative foreign direct investment (FDI) in decades, marking another significant and worrying indicator of Beijing’s sluggish post-pandemic recovery.

«Conducting business in China is getting increasingly difficult,» Josh Birenbaum, deputy director for the Center on Economic and Financial Power at the Foundation for Defense of Democracies, told FOX Business. 

«China's economy is unquestionably in rough shape right now,» he said, stressing that the FDI numbers «are a big part of that.» 

FDI for China in Q2 2023 totaled $4.9 billion, a whopping 87% decrease on the year and the largest drop since 1998, when comparable data was first available, Nikkei Asia reported. FDI has dropped more than 50% since Q2 2022, but the latest drop is the lowest FDI has hit on record. 

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The outflow of investment totaled around $11.8 billion, according to Axios. Goldman Sachs analysts suggested «some» of the weakness could have resulted from «multinational companies repatriating earnings,» but regardless may indicate how quickly expectations about China’s growth have «shifted.» 

China has not regained the kind of financial muscle it was throwing around before the pandemic, with several issues resulting from the global supply chain crisis having forced countries to reconsider their reliance on China for production and trade. 

China's President Xi Jinping leaves the podium following his speech