China Records Steady FDI Growth in 2022
Foreign direct investment into China slowed in 2022 compared to the previous year, but growth nonetheless remained steady. Manufacturing and high-tech industries continued to attract high levels of foreign investment despite the overall economic slowdown, and some regions, such as the EU, increased investment in China significantly. We break down the latest data for FDI in China and discuss what may be in store for 2023 as the country sets its sights on growth.
China’s FDI data, which was released on January 18, 2023, by the Ministry of Commerce (MOFCOM), shows FDI inflows into the country slowed but remained “steady” in 2022.
The slowdown has most likely been caused by the sporadic COVID-19 outbreaks and stringent control measures imposed over the course of the year, which has knocked business confidence in the China market. Nonetheless, investment into certain industries and from certain regions grew rapidly in 2022, showing that China remains an attractive destination for many investors.
As the country enters a new post-COVID era, the government is now laser-focused on economic growth and is thus eager to attract more foreign capital in 2023.
FDI inflows in 2022
In 2022, China’s actual use of foreign capital reached RMB 1.2 trillion, up 6.3 percent from the previous year. In US dollar terms, it reached US$189.13 billion, a year-on-year growth rate of 8 percent.
This is a marked slowdown from 2021, when FDI grew 14.9 percent and 20.2 percent year-on-year in RMB and US$ terms, respectively.
Looking at the breakdown for 2022, we can see that growth in FDI inflows slowed throughout the year, peaking at a rate of 37.9 percent year-on-year in the period from January to February and slowing to 6.3 percent year-on-year from January to December, in RMB terms. June saw the largest inflows of FDI in terms of value, with RMB 159.1 billion (approx. US$23.5 billion) being absorbed that month.
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