Foreign investors withdrew a record USD 15 billion from China last quarter due to concerns about the country’s economy. This reflects the deep pessimism about the world’s second-largest economy. 

The direct investment liabilities in China’s balance of payments dropped by almost USD 15 billion in April-June, marking only the second time this figure has turned negative. 

If the decline continues for the rest of the year, it would be the first annual net outflow since at least 1990. Foreign investment in China has decreased in recent years, with the slow economy and rising geopolitical tensions leading some companies to reduce their exposure. 

The rapid shift to electric vehicles in China has also caught foreign car firms off guard, causing some to withdraw or scale back their investments. 

Despite Beijing’s efforts to attract and retain foreign investment, the decline continues. Data also shows that Chinese outbound investment hit a record, with firms sending USD 71 billion overseas in the second quarter, up more than 80% from last year. 

Additionally, the anomaly in measuring China’s trade surplus continues to grow, hitting a record USD 87 billion in the second quarter. The US Treasury highlighted this gap and called on China to clarify why the numbers differed.

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