Due to Sharp Decline in Foreign Investment from China... "Subsidy, Employment, and Real Estate Policies Needed"

Xi Jinping to Dine with US Business Leaders Next Week
"Trust in China's Economy Must Be Restored"

China's foreign direct investment (FDI) recorded its first quarterly deficit since data collection began, prompting calls from within the country to maintain strong consumption levels through various subsidies and employment policies. The aim is to sustain rational national economic growth while securing potential as an 'investment market.'

On the 9th, Hong Kong's South China Morning Post (SCMP) cited remarks from Chinese economists and experts, reporting that "China needs to strengthen economic resilience to restore confidence in its economy and attract foreign investment." Wang Tao, UBS China's chief economist, stated at a recent seminar on Chinese investment that "the decline in foreign investment has been driven by Western governments' attempts at 'risk removal' and high dollar borrowing costs," adding, "All foreign companies are concerned about political, commercial pressures from the government, and other risks."

[Image source=EPA Yonhap News]

Economist Wang explained, "Even if it is not economically beneficial, they may still consider reducing their involvement in China and expanding into other countries, a so-called 'China Plus One' strategy." He emphasized, "It will be very difficult for foreign investment to return to the levels of the past decade," and added, "We are not optimistic. It would be truly remarkable if it could return to half of the past decade's level."

Previously, one of the indicators measuring China's FDI, direct investment liabilities, recorded a deficit of $11.8 billion (approximately 15.5465 trillion KRW) in the third quarter. This marks the first quarterly deficit since the State Administration of Foreign Exchange of China began compiling related data in 1998.

Wang said, "Foreign investors are increasingly concerned about the long-term outlook for China's annual economic growth," noting, "Some worry that China's economic growth rate could drop by 2 to 3% within the next few years."

[Image source= Xinhua News Agency]

Shen Zenguang, chief economist at JD.com, argued that strong consumption is a crucial factor in securing foreign investors, and thus economic growth must be maintained at a reasonable level. He emphasized, "Fiscal policies should be strengthened, subsidies provided to low-income groups, employment promoted, and measures taken to stabilize the real estate market," adding, "All of these will help attract foreign investment."

Ryu Yuanchuan, president of Shanghai University of Finance and Economics, diagnosed that "due to U.S. political pressure and changes in China's trade structure, countries like Japan, one of China's largest foreign investors, are withdrawing." President Ryu stressed, "The current recession is likely temporary and will not last long," urging China to continue leveraging its massive market size and build a strong growth foundation.

Yi Xiaojun, former deputy director of the World Trade Organization (WTO), explained that political pressure alone does not improve multinational companies' supply chain security. At the recent China International Import Expo (CIIE) held in Shanghai, he stated, "Acting without economic principles and simply emphasizing ideology or choosing sides will be difficult to sustain in the long term."

Meanwhile, Chinese President Xi Jinping is expected to visit the United States to attend the Asia-Pacific Economic Cooperation (APEC) summit held in San Francisco. On the 15th, he is scheduled to have a dinner with local business representatives. This occasion is anticipated to soothe Western concerns about Chinese investment while emphasizing cooperation and shared growth.

This content was produced with the assistance of AI translation services.