US investment in China dropped sharply by 28 percent, while foreign direct investment (FDI) maintained double-digit growth from January to April, the Ministry of Commerce of China said.

Economists said they believed the US investment decline is temporary, and the Chinese economy, over the long term, will provide US companies with increased investment opportunities.

US investment from January to April decreased to $1.03 billion and the number of US firms setting up in China also fell by 3.85 percent to 475.

In contrast, European Union investment rose by 23.42 percent to $2.64 billion. Investment from the Asia-Pacific region, including Japan, South Korea and Singapore, registered growth of 31.23 percent to $32.88 billion.

The ministry said that FDI for April rose by 15.21 percent, from a year earlier, to $8.46 billion, the fourth month that FDI witnessed double-digit growth this year.

China Us Flags
US investment from January to April decreased to $1.03 billion and the number of US firms setting up in China also fell by 3.85 percent to 475.

“US investment could drop further over the short-term,” Song Hong, head of the Department of International Trade at the Chinese Academy of Social Sciences, said.

Song attributed this to a decline in US manufacturing, a key component of US investment, following the global financial crisis. He also said that with the recovery in the US economy, businesses that had invested in China were returning to the US market.

But others cited rising labor costs as a reason.

“We cannot ignore the fact that investment into China from developed nations, including the US, is slowing thanks to China’s rising labor costs,” said Zhang Yansheng, director of the Institute for International Economic Research under the National Development and Reform Commission.

US investment in China in 2010 grew by 13.31 percent year-on-year, compared to 31 percent for its total overseas investment, according to the United Nations Conference on Trade and Development.

Yuan Gangming, a researcher at the Center for China in the World Economy at Tsinghua University, said “the US is much too reliant on China” for investment to drop over the long term.

But US investors “probably have complaints, such as barriers”, he said.

In a survey of its member companies released last month the US Chamber of Commerce in China cited “bureaucracy, lack of management, ambiguous laws and infringement of intellectual property rights” as major challenges facing US firms here.

via US investment in China down sharply as FDI rises – People’s Daily Online.

About the author

1 comment
  1. China and USA’s economy are tied together, even with the debts trouble, USA is still leading the world economy.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Sign Up for Our Newsletter

Get notified of our weekly selection of news

You May Also Like

Thailand’s New Five-Year Investment Promotion Strategy

The statement suggests that over the next five years, the BOI will put greater emphasis on increasing support for both domestic and foreign investors by improving Thailand’s business environment and ease of doing business

Top 50 APAC firms lose $900 billion market capitalization in Q3 2022

In Q3, 80% of the top 50 companies reported a decline in MCap from the previous quarter. Geo-political issues between the US and China over Taiwan, government regulations on tech stocks, and prolonged mass lockdowns impacted the Chinese market

China: Demographic shift poses tough economic and fiscal challenges

China’s economy looks set to enter a structural slowdown. We forecast GDP growth will slow to an annual average of around 4.5% this decade, down from 7.7% per year in 2010-2019.