China should not underestimate impact of inward FDI plunge

The number of people and companies hesitant to invest in China is increasing and will continue to grow unless Beijing changes its policy priorities. The plunge in foreign investment appetite toward China has profound implications, which Chinese President Xi Jinping and his leadership team should take very seriously. 

Foreign direct investment into China totaled $33 billion on a net basis in 2023, according to balance of payments data announced by the government. That is down roughly 80% from the previous year and just under 10% of the peak reached in 2021. This low level is comparable to that when Deng Xiaoping called for accelerated reform and opening up in his 1992 "southern tour" after seeing a plunge in foreign investment in the wake of the 1989 Tiananmen Square incident.