Foreign investors pulled a record $15 billion from China during the April-June period, reflecting deepening skepticism about the world's second-largest economy, a Bloomberg report said.
This substantial outflow marks only the second time China's direct investment liabilities have turned negative, according to data released Friday by the State Administration of Foreign Exchange, or SAFE. The total decline for the first half of the year reached approximately $5 billion, the report said.
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If this trend continues, it will be the first annual net outflow since data collection began in 1990. The surge in withdrawals follows a significant peak in foreign investment, which hit $344 billion in 2021, but has since been overshadowed by economic slowdowns and rising geopolitical tensions, Bloomberg said.
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Foreign car manufacturers, in particular, have been caught off guard by China's rapid shift to electric vehicles, prompting some to withdraw or scale back their investments.
Despite Beijing's efforts to attract and retain foreign investment, including initiatives to present itself as open and appealing to international businesses, foreign direct investment into China fell to its lowest level since the onset of the pandemic in 2020.
On the other hand, Chinese outbound investment has surged, with firms sending a record $71 billion overseas in the second quarter, up over 80% from the previous year. This increase is driven by investments in sectors like electric vehicles and battery manufacturing, the report said.
As per Bloomberg, the data also reveals a significant anomaly in China's trade surplus, which hit a record $87 billion in the second quarter, totaling nearly $150 billion for the first half of the year. The US Treasury has highlighted this discrepancy, suggesting it stems from differences in how exports and imports are recorded. This gap has been further widened by a recent shift in data reporting and increased production by foreign firms in bonded zones.
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