China’s foreign direct investment plunges 27.6 per cent in November on trade war worries
- Investors spooked as fears of further tariff increases cause sharp deterioration in business confidence about China’s economic outlook
- November drop came before trade war truce agreed by Trump and Xi
Foreign investment in China fell sharply in November as concerns over the tariff battle between China and the United States hit investor confidence.
According to figures released by the Ministry of Commerce on Thursday, foreign direct investment (FDI) in the month fell 27.6 per cent year on year to US$13.6 billion.
The slide came despite Beijing making the stabilisation of foreign investment one of its top economic policy priorities. Although even before November, the FDI growth rate had being slowing for the past three months, hitting a four-month low of 7.3 per cent in October.
The plunge also happened before Chinese President Xi Jinping and his US counterpart Donald Trump agreed a 90-day trade war truce in Buenos Aires on December 1, at a time of high uncertainty about the impact the dispute was having on China’s economy.
Beijing was quick to play down the latest figures.
“The monthly decline is due to the high base of comparison in the same period of last year,” commerce ministry spokesman Gao Feng told a regular briefing.
Economists said the slump in foreign direct investment was inevitable given the impact the trade tensions between Beijing and Washington had had on business confidence.