China is struggling in its attempt to lure foreign nationals back as data shows more direct investment flowing out of the country than coming in, suggesting companies may be diversifying their supply chains to reduce risks.
Direct investment liabilities in the country’s balance of payments have been slowing in the last two years. After hitting a near-peak value of more than $101 billion in the first quarter of 2022, the gauge has weakened nearly every quarter since. It fell $11.8 billion in the July-to-September period, marking the first contraction since records started in 1998.
"It’s concerning to see net outflows where China’s doing its best at the moment to try and open — certainly the manufacturing sector — to new inflows,” said Robert Carnell, regional head of research for Asia-Pacific at ING Groep NV. "Maybe this is the beginning of a sign that people are just increasingly looking at alternatives to China for investment.”