According to newly released data from the Chinese Ministry of Commerce, the country attracted 301.67 billion yuan (approximately 42 billion USD) in FDI in the first quarter of this year, a decrease of 26.1% compared to the same period last year. The declining trend in FDI into China is still on the rise, as earlier this year, FDI into the world's second-largest economy decreased by 19.9% compared to the same period last year.

According to the Chinese Ministry of Commerce, the sharp decline in FDI in the first quarter of this year is partly due to the high base comparison from last year. However, this can still be seen as a worrisome signal. The downward trend in FDI into China began to emerge last year, stemming from some political and economic tensions and uncertainties facing China. FDI into China in terms of yuan in 2023 decreased by 8.0% compared to the same period the previous year.

Facing the declining trend of FDI, the Chinese government has since last year introduced a series of policies to attract foreign investors, pledging to create a fair and open business environment for investors. According to Oxford Economics experts, these policies have somewhat improved investor confidence in the Chinese market in 2023. However, most investors are still relatively cautious about expanding investment in this market.

The FDI landscape in China in the first quarter of this year also witnessed some bright spots. The number of newly established foreign-invested enterprises in the country reached 12,086 in the first quarter of this year, an increase of 20.7% compared to the same period last year. It is noteworthy that FDI from Germany into China in the first quarter of this year increased by a significant 48%. Meanwhile, FDI from the ASEAN region into China in the first quarter of 2024 also saw a slight increase of 5.8%. 12.5% of FDI into China in the first quarter of this year also flowed into the high-tech manufacturing sector, an area that China is prioritizing for development.

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