China Foreign Direct Investment YoY

Foreign direct investment (FDI) into China sank by 10.8% from the previous year to about $36.9 billion in the first quarter of 2025. The result followed the 27.1% slump in 2024, which was the sharpest decline in foreign direct investment on record with data going back to 2008. The decline continued to reflect weaker foreign confidence into largest projects in the Chinese economy, pressured by risks of a deflationary spiral and the view that the government delayed in its stimulus response, recently magnified by the threat of tariffs from the United States governemnt. Additionally, opaque balance sheets for manufacturers and service providers held the unease of foreign investors. Still, signs of economic support from the government and hints that the CCP may relax its tight control on the tech sector raised sentiment for portfolio investments in China at the turn of the year, potentially translating into higher direct investments later in the year.