China’s Foreign Investment Decreases in First Quarter of 2023, But Efforts are Made to Attract More Investors

China’s foreign investment in the first quarter of 2023 decreased by 26.1%, totaling 301.7 billion yuan or 41.7 billion USD, according to data released by the Chinese Ministry of Commerce. This represents the weakest first quarter since 2020. The decline in foreign investment capital has been gradual over the past three months, decreasing from 113 billion yuan in January to 102 billion yuan in February and 90 billion yuan in March.

Ji Xiaofeng, an official at the Ministry of Commerce, attributed the drop partly to a high base in the same period last year. However, compared to the fourth quarter of 2023, foreign investment capital in China in the first quarter increased by 41% and the investment structure improved.

Speaking at the Boao Forum for Asia last month, deputy director of China’s foreign exchange administration Xu Zhibin stated that China’s foreign direct investment developments were “basically in line with global trends.” Despite this, China is making efforts to attract more investors as seen through Premier Li Qiang’s pledge at the China Development Forum in Beijing in March to improve the business environment and implement reforms in key areas to create a “more open China” and collaborate with the world.

In response to this challenge, on April 19th, Beijing announced measures to promote foreign investment including support for foreign organizations to issue bonds domestically and loosening restrictions on foreign strategic investments in Chinese listed companies. Additionally, Beijing is encouraging foreign technology companies to raise funds through bond issuance and creating favorable conditions for foreign investors to participate in Chinese technology companies. The country also plans to approve foreign investment in Chinese stocks and bonds efficiently.