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Last year (Q3), China suffered an outflow of foreign direct investment for the first time since records began in 1979. This was a sure sign that foreign companies, especially American companies, were choosing to “friendshore” their businesses and withdraw funds. Chinese.
Investors are spooked by Xi Jinping’s vague national security law and U.S. policies that encourage cuts in investment in China, particularly in strategically important sectors such as semiconductors.
This helps explain why Chinese people have returned to Davos in earnest for the first time since Xi spoke at the World Economic Forum in 2017. The delegation, led by Premier Li Qiang, will send a message that China is open to the outside world.
The consensus for China’s economic growth rate in 2024 is 4.6%, which is strong by most countries’ standards, but slowing from last year’s 5.2% and eclipsing its ability to once exceed 10%. . A weak housing market and weak consumer confidence didn’t help. Still, it is likely the geopolitical chill that prompted Xi Jinping to try to reverse the negative sentiment, starting with his meeting with President Joe Biden at the APEC summit last November.
Economists say that although FDI only accounts for 3% of total investment, it is important for China because it brings international best practices to the domestic market and strengthens competition.
Li hopes to persuade major Middle East sovereign wealth funds in Saudi Arabia, Qatar, Oman, Kuwait and the United Arab Emirates (UAE) to reverse the decline in FDI and make up for lost Western dollars. I’m sure you are.
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