With China’s economic slowdown and tensions between the United States and China, foreign investors have been fleeing China, and some experts predict that foreign investment in China may be sluggish for most of 2024. The picture shows an interior photo of a stock exchange in China. (Getty Images)
[The Epoch Times, December 30, 2023](Epoch Times reporter Lin Yan reported) As China’s economy slows down and U.S.-China relations become tense, foreign investors have been fleeing China. Some experts predict that most of 2024 may see Until foreign investment in China slumps, capital inflows may not rebound significantly.
Mary Lovely, a senior fellow at the Peterson Institute, an American think tank, said in an interview with Bloomberg on Thursday (December 28) that although Beijing recognizes the importance of bringing in foreign capital, its policies have always been detrimental to investment. Produce a “chilling effect.”
“Our latest finding is that not only is foreign investment in China down, but foreign investors are actually selling assets in China – something we’ve never seen before,” she said.
At the same time, overseas investors began to short Chinese stocks, and the amount of mainland stocks purchased in 2023 hit a record low.
Beijing began to lift strict COVID-19 clearance policies at the end of 2022, but it failed to bring about a much-anticipated sustained economic rebound, while the real estate crisis and consumer pessimism also weighed on economic growth.
Both domestic and international policies are putting more pressure on investment, and Lovely expects these trends to continue in 2024.
She said China’s leadership is likely to continue to strictly regulate foreign companies while giving the party greater authority in managing the economy. At the same time, U.S. policy is also likely to continue to prioritize shifting supply chains away from China.
“In fact, we may see sluggish foreign investment in China for most of 2024,” Lovely said.
Last week, China announced stricter regulations on the online gaming industry, causing stocks of technology giants such as Tencent and NetEase to fall.
Bloomberg expects annual purchases of Chinese stocks by foreign investors to hit a record low in 2023 amid concerns over a fragile economic recovery and geopolitical tensions.
So far, foreign funds have bought a net 44 billion yuan ($6.1 billion) of domestic stocks through Shanghai-Hong Kong Stock Connect, the lowest level since Bloomberg began compiling annual data in 2017.
Chinese stocks have underperformed this year as a lack of strong stimulus and regulatory uncertainty led to a severe sell-off. Overseas funds have fled the Chinese stock market for five consecutive months in the past 12 months, which is the longest continuous flight from the Chinese stock market on record.
While some fund managers have called Chinese stocks undervalued and said it’s time to buy the dip, many investors have doubts about the long-term appeal of the Chinese market.
Economic growth is set to slow due to concerns that policy support from China’s private sector will no longer exist, corporate profits will no longer grow at an alarming rate, and China’s population will suffer from negative growth. These are all affecting direct and indirect investments by foreign investors in China.
Editor in charge: Ye Ziwei
2023-12-30 12:09:00
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