Foreign investment into China declines as MNCs grow pessimistic about Chinese economy
May 22, 2022
Beijing [China], May 22 : Direct foreign investment into China by multinational companies is falling off a cliff as investors are becoming increasingly pessimistic about the Chinese economy amid President Xi Jinping's strict COVID policies and his stance on Russia's war on Ukraine.
These MNCs are facing severe challenges in conducting their businesses in China. A host of political and regulatory issues are being exacerbated by Xi Jinping's policies which are conspiring to eviscerate the dreams of many multinationals, reported Financial Times.
China-Europe ties are also taking a hit amid this rising situation. Joerg Wuttke, president of the EU Chamber of Commerce in Beijing says that the unpredictability is prompting the European business community to put investments into China "on hold".
Citing an attitudes survey this month of the EU Chamber of Commerce's 1,800 members, Joerg Wuttke, president of the chamber in Beijing said, "Many of our members are now taking a wait-and-see approach to investments in China."
"Twenty-three per cent of our members are now considering shifting current or planned investments out of China, the highest level on record. And 77 per cent report that China's attractiveness as a future investment destination has decreased," he added.
Apart from the communities in Europe, the Pessimism towards the Chinese economy has also engulfed the US business community. Travel hassles including flight cancellations, visa complications and lengthy quarantines on arrival -- will lead to a "massive decline" in US investment in China, as per the media portal.
Meanwhile, a survey by the German Chamber of Commerce found that nearly 30 per cent of foreign employees had plans to leave China.
All of this is a fallout of the Chinese Zero-COVID policies that has resulted in anguish of expat families locked down in their apartments for weeks in Shanghai.
This may cause a fundamental shift in how the global economy functions. China has remained one of the hottest destinations for western multinationals seeking to offshore manufacturing operations however this is likely to change.
Boeing's biggest customer in China announced the removal this month of more than 100 of the US manufacturer's 737 MAX jets from its planned purchases.
US sportswear group Nike and Swedish fashion retailer H&M were among brands targeted by Chinese consumer boycotts last year after they made comments about forced labour in Xinjiang.
