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China’s National Bureau of Statistics announced in its September economic statistics released on October 18 that the growth rate in the third quarter of this year was 4.9%. /Capture from Eastern Satellite TV
As of October, Chinese economic report cards for the third quarter (July-September) are coming out one after another.
The growth rate for the third quarter announced by the National Bureau of Statistics was 4.9%. It fell compared to the second quarter (6.3%), but was higher than market predictions (4.4-4.5%). Although exports and investment were sluggish, there are signs that consumption and industrial production are reviving. Although the real estate market is still mired in recession, the economy itself appears to have bottomed out.
However, foreign investors’ view of the Chinese economy is worsening. Foreigners are said to have withdrawn $10.9 billion worth of funds from the Chinese stock market in the three months of the third quarter. It is said to be the largest net outflow since the introduction of the back-to-back transit system in 2014, which allows stocks on the Shanghai Stock Exchange in China to be traded through the Hong Kong Stock Exchange. The amount of foreign direct investment in the second quarter (April to June) was also said to be $4.9 billion, down 87% compared to the same period last year. The fact that investment funds are flowing out like this means that the future of the Chinese economy is looking very bleak.
Foreign companies are continuing to defect from China. Mitsubishi Motors, which has been running a joint venture with Guangzhou Motors, has decided to withdraw from the Chinese market.
◇’Cell China’ has been on fire since August
It was last August that global investors began withdrawing funds from the Chinese stock market. The Financial Times reported that in August alone, there was a net outflow of $12.4 billion. JP Morgan also said, “Foreign investors sold $12 billion worth of Chinese stocks in August, breaking a new monthly record.” ‘Cell China’ began.
What is painful from China’s perspective is that foreign direct investment (FDI) is rapidly decreasing. FDI in the second quarter was $4.9 billion, a decrease of 87% compared to the second quarter of last year ($38.1 billion). It is said to be the largest quarterly decline since 1998. It was significantly lower than the United States’ $72.85 billion and Japan’s $15.45 billion during the same period.
There are many reasons why overseas investors are leaving China. In the short term, the US interest rate hike is a factor. The United States is raising interest rates, but China is lowering interest rates, so funds are flowing to places with high interest rates. As the value of the Yuan against the dollar continues to fall, there may be an aspect of preventing exchange rate losses.
Graphics = Chosun Design Lab Jeong Daun
◇“Reliability is at its lowest level since 1998”
What is even bigger is that trust in the Chinese economy has disappeared. The growth rate continues to decline, there is no way out of the real estate crisis, and the uncertainty of the U.S.-China conflict has added to the situation, making it difficult to be certain about the future of the Chinese economy.
“Confidence in Chinese stocks has fallen to its lowest point since the 1998 financial crisis,” said the head of investment in Asia at GAM Investments in Switzerland in a Nikkei interview. “Chinese stock markets are undervalued, but international investors are not paying attention to this at all.” “It’s not an atmosphere of leaning,” he said. Raymond Cheong, head of North Asia investment at Standard Chartered Bank, said, “Unless the Chinese authorities take decisive measures to overcome the real estate market crisis, investors will hold off on investing,” adding, “Currently, if the stock price rises even slightly, they sell their stocks. “He said.
China’s introduction of the Anti-Espionage Act on July 1 is also having an impact on foreign investors. It is said that foreign companies in China are being searched and seized for reasons of national security, and executives are being banned from leaving the country, to the point where executives and employees of foreign-invested companies are reluctant to travel to China.
Nikkei Asia’s October 8 article covering the withdrawal of foreign investment funds from the Chinese stock market. /Nikkei Asia
◇Mitsubishi Motors also withdraws from China
This year, China successively investigated U.S. consulting firm Bain & Company and research firm Mintz Group. In addition, a travel ban was recently imposed on Michael Chan, head of the Hong Kong branch of Kroll, an American consulting firm, and Wang Zhonghe, chairman of the Chinese investment banking division of Nomura International, an investment bank under Japan’s Nomura Group. Foreign news reports are coming out one after another about people who went on a business trip to China and were taken by the police at the airport or hotel and interrogated for hours.
Because of this situation, high-ranking executives of foreign companies are said to be avoiding business trips to China as much as possible. When going on a business trip to China, there are even recommendations that you should leave behind the things you normally use and take with you a laptop computer or cell phone that you have never used. In an interview with VOA, Professor Sun Guoxiang of Nanhua University in Taiwan said, “During the period of reform and opening, China was able to attract investment from all over the world and become a world factory. “There will be problems.”
At the end of September, it was reported that Japan’s Mitsubishi Motors would withdraw from the Chinese market. It has been 11 years since we entered China in 2012 through a joint venture with Guangzhou Motors.
At one time, Korea and Japan were major investors in the Chinese market and many businessmen stayed in China, but now the number of people staying there is rapidly decreasing. In Japan, the Chinese population, which reached 150,000 in 2012, is said to have decreased to 100,000 last year.
Mitsubishi headquarters in Tokyo, Japan. /Reuters Yonhap News
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2023-10-21 15:00:00
