Foreign Direct Investment from January to April This Year to China Falls 28% Year-on-Year

Foreign direct investment (FDI) in China over the four months from January to April this year significantly decreased compared to the same period last year.

According to the Ministry of Commerce of China on the 24th, the total FDI attracted by China during this period was 360.2 billion yuan (approximately 67.8 trillion won), down 27.9% from the same period last year when the country fully initiated its post-COVID-19 lockdown "reopening."

[Image source=AFP Yonhap News]

The Ministry of Commerce explained that FDI in manufacturing accounted for 28.8% of total FDI, an increase of 2.8 percentage points from the previous year, and the share of high-tech manufacturing (12.7%) also rose by 2.7 percentage points during the same period. By detailed sector, FDI in medical device manufacturing increased by 126.1%. Foreign investment in accommodation and food services grew by 65.1% during the same period.

By investing country, Spain's investment in China surged by 263%, while Germany and the Netherlands increased by 34.7% and 9.5%, respectively. During the same period, the number of newly established foreign-invested enterprises reached 16,805, up 19.2% compared to the same period last year.

Despite some detailed items showing increased investment scale, the Ministry of Commerce attributed the sharp decline in overall FDI attraction to the "base effect" following the record-high FDI in the January-April period last year, and self-assessed that "the attractiveness of the Chinese market as a destination for foreign investment continues to strengthen in line with the long-term improvement trend of the Chinese economy."

Meanwhile, on the day before the start of China's military drills encircling Taiwan, Chinese President Xi Jinping attracted attention by attending a gathering of economic figures from both inside and outside China. In his speech at the meeting, President Xi declared, "We will devote ourselves to building a socialist modern country" and "firmly eliminate ideological concepts and institutional defects that hinder the progress of Chinese-style modernization." Some observers have evaluated this as a "discordant move," arguing that it escalates military and security tensions, adversely affecting the Chinese economy while simultaneously emphasizing economic recovery.