China’s inbound foreign direct investment plunges in February as coronavirus disrupts economy

Foreign direct investment into China dropped 25.6 per cent last month after a 4 per cent gain in January

Chinese official admits it will be difficult to hold foreign investment steady this year, as the coronavirus pandemic hits the global economy

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Beijing fears the impact of the coronavirus could accelerate the exodus of manufacturing from China as companies look avoid future risk. Photo: AP

Published: 5:54pm, 13 Mar 2020Updated: 6:24pm, 13 Mar 2020

Foreign direct investment into China shrank by a quarter last month from a year earlier amid an outbreak of coronavirus, the Ministry of Commerce said on Friday, underscoring the tough job facing Beijing to woo overseas investment in its slowing economy.

Investment into China fell 25.6 per cent in February in yuan terms from a year ago, after increasing 4 per cent in January, Zong Changqing, head of the ministry’s foreign investment department, said at a press conference in Beijing.

“It will be an extremely challenging job to stabilise foreign investment this year,” he said.

The drop in FDI last month is not surprising as manufacturing and service activities in China came to a halt in February as the government imposed draconian controls to contain the spread of the virus.

Beijing fears the impact of the coronavirus, which has disrupted global supply chains in the car and electronics industries, could accelerate the exodus of manufacturing from China as companies seek to avoid over-reliance on one country.