The decline in direct investment in China’s economy has accelerated

The flight of investors from China accelerated in September despite signs of economic recovery. At the end of nine months, the amount of foreign direct investment (FDI) in China amounted to $125.7 billion (920 billion yuan), which is 8.4% less than a year earlier. For January–August, a decline of 5.1% was recorded compared to the same period in 2022. At the end of eight months, the amount of FDI amounted to $118 billion (847 billion yuan). In addition to the decline in FDI, China is also facing an outflow of funds from financial markets. In September, non-residents withdrew $8.8 billion from Chinese securities ($4.4 billion from stocks and the same amount from debt instruments), according to data from the Washington Institute of International Finance (IIF). However, compared to August, the outflow has slowed down. Then foreign investors withdrew $20.1 billion (a record $15.1 billion from stocks and $5 billion from bonds).

The Chinese economy grew by 4.9% in the third quarter of 2023 in annual terms, according to data from the State Statistics Administration (SSA) of the People’s Republic of China. This is higher than market expectations (according to consensus analyst forecasts, growth should have been 4.4–4.5%), but lower than 6.3% recorded in April–June. In January–September, GDP increased by 5.2% compared to the same period last year. In general, by the end of 2023, the authorities expect growth of 5%.