(WatchDogReport.org) – The Chinese regime reported on November 6 its first quarterly decline in foreign direct investment ever. Experts believe the historic loss can be interpreted as a sign that the numerous “de-risking” initiatives from Western corporations and governments are severely affecting Beijing.
In a statement, the Chinese finance ministry said that the country’s foreign direct investment fell by $11.8 billion in the quarter that ended in September. The massive fall leaves the Chinese regime with $3.2 billion in red ink on the basic balance sheet.
In an analysis quoted by news agency Reuters, Goldman Sachs said that some of the weaknesses in the Asian nation’s “inward FDI” were caused by the way so many multinational companies repatriated their earnings. The banking company also anticipated that the pressures of money moving out from China are expected to continue, as interest rates in the country will remain low for an extended period while interest rates will remain high “outside.”
According to The Wall Street Journal, one of the main reasons why so many foreign firms are pulling their money out of China is because of the nation’s slowing economy and geopolitical tensions. The newspaper said the situation is not surprising because many international companies were already pulling their profits out of China during the “boom years” of the country’s economic growth.
The Journal noted that China’s current crisis will be difficult to solve because Beijing needs lower rates to solve the chaos of its real-estate market, while the United States is raising rates to tackle inflation. The newspaper also pointed out that many foreign companies have hinted at their interest in pulling their money out of China to finance investments and acquisitions in other nations. Speaking under condition of anonymity, executives from some of these corporations told the Journal they don’t want to be so highly dependent on Beijing to sustain their supply chains.
Along with the current economic crisis that China is experiencing, economic analysts believe that the loss in foreign direct investment might affect the Chinese regime’s influence overseas and create internal divisions.
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