2/20/2024: Foreign Investments in China Lowest Since 1993
A few days ago, China’s State Administration of Foreign Exchange (SAFE) released preliminary data of the Balance of Payments for the Q4 2023 and 2023. The results are not pretty. Net foreign investments went down from $190B in 2022 to just $33B in 2023, a 82% decline and the lowest since 1993.
The prolonged period of COVID lockdown, the US-China tensions and the gigantic real estate bubble probably contribute to this dramatic slowdown. One interesting thing from the report is that the net equity investments into China were $62.1B while the net debt instruments were negative $29.1B. It’s totally understandable that foreign investors are exiting Chinese corporate debts. Those Evergrande bonds are trading at less than two cents on the dollar. I wonder if the net foreign investments into China will turn negative in 2024 if China’s economic conditions deteriorate further.