U.S.-China trade conflicts, China’s regulatory crackdown, and uncertainties in commercial policies have severely damaged confidence in doing business in China. Analysis pointed out that foreign investors’ willingness to invest in China has declined, and direct investment in China has plummeted, which will put greater exchange rate pressure on the RMB.
Reuters reported that, according to data from China’s State Administration of Foreign Exchange, China’s foreign direct investment (FDI) fell to US$4.9 billion (about NT$155.7 billion) in the second quarter, the lowest level on record; , COVID-19 (coronavirus disease 2019) is strictly cleared, and China regulates private enterprises, etc.
The sudden drop in capital inflows to China may increase the pressure on the RMB exchange rate fluctuations. The report quoted the opinion of Logan Wright, director of China market research at Rhodium Group, that foreign direct investment is not a key factor in exchange rate fluctuations most of the time, because there is usually a surplus of 5 billion to 100 billion US dollars per year; but in the current situation It can be seen that the amount of investment has indeed been greatly adjusted.
Many business leaders and consultants also said that due to concerns about political risks, investment strategies will be adjusted and changed; other analysts pointed out that the decline in foreign direct investment is largely due to the US-China conflict and the tension between China and Western countries. Relationship risk assessment.
“I don’t have any clients who want to invest in China,” John Ramig, a shareholder of the Buchalter law firm specializing in international business trade, pointed out in the report that every client wants to sell their business in China, or find Alternative options, this dramatic change is very different from 5 years ago.
According to the latest data from the State Administration of Foreign Exchange of China, since the beginning of this year, the purchases of US dollars by Chinese banks for foreign direct investment have continued to exceed the purchases of RMB for foreign investment, resulting in capital outflows for six consecutive months. According to data from the Ministry of Commerce of China, the actual use of foreign direct investment fell by 5.6% from January to May this year, the largest drop in three years.
The report emphasized that many companies are making decisions to withdraw from China or to avoid increasing production capacity in China, but some companies have not completely left China; the person in charge of a hosiery manufacturer said that they are considering transferring the production line located in the Yangtze River Delta to Peru, but the new location The quality and price of the goods produced are still far inferior to those of factories in China.
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