FDI from January to April Increased by Only 2.2% Year-on-Year
"Due to Base Effect... Will Continue to Improve"
China is actively seeking to attract foreign investment, but the results remain stagnant at pre-With-Corona levels. China attributes the recent sluggish trend to the 'base effect' and expects an improvement in foreign investment attraction based on positive economic growth forecasts.
According to the announcement by China's Ministry of Commerce on the 17th, China's real foreign direct investment (FDI) from January to April this year was 499.46 billion yuan (approximately 95.3619 trillion KRW), an increase of 2.2% compared to the same period last year. By country, investment from France increased by 567.3%, and the UK by 323.7%. The real investment scale from Japan and Korea also grew by 68.1% and 30.7%, respectively.
By industry, inflows into high-tech industries are accelerating. During the same period, the real investment scale in advanced industries increased by 12.8% compared to last year. Among these, advanced manufacturing grew by 37.1%, and advanced services by 6%.
However, the overall investment growth rate is slowing over time. China's real FDI growth rate, based on cumulative amounts, slowed to 6.1% in February and 4.9% in March this year, then dropped to the 2% range. The Ministry of Commerce explained this as "due to a high base effect from increased investment last year." The real FDI scale from January to April last year was 478.61 billion yuan, a sharp increase of 20.5% compared to the previous year. That period was when China strictly adhered to its zero-COVID policy to control the spread of COVID-19. Based on cumulative amounts announced by the Ministry of Commerce, the investment growth rate in April was the lowest in about 33 months since July 2020 (0.5%).
China has promoted itself as still being a "popular destination for global investors" by highlighting large-scale investment cases. The American automobile manufacturer Tesla announced in early April plans to build a megafactory in Shanghai. This plant, intended to produce large-capacity electric energy storage devices, is scheduled to begin construction in the third quarter within the Shanghai Lingang Free Trade Zone and aims to start operations in the second quarter of next year. European aircraft manufacturer Airbus also announced at the end of last month the establishment of a retired aircraft dismantling and recycling service center in Chengdu, Sichuan Province, southwestern China. The investment scale amounts to 6 billion yuan.
Chinese local media China News Network reported, "As China's economic recovery in the first quarter gains momentum, many international organizations and institutions have raised their economic growth forecasts for China this year," adding, "Analysts also believe that as the economy stabilizes, more investors will invest in China, and China's foreign investment absorption situation will improve compared to last year."
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