FOREIGN direct investment into China shrank 26.1 per cent in the first quarter from a year earlier, following a contraction of 8 per cent in 2023, official data showed on Friday (Apr 19), underscoring challenges facing Chinese authorities to win back foreign firms.

Foreign direct investment (FDI) totalled 301.7 billion yuan (S$56.8 billion) in January-to-March quarter, the commerce ministry said. The investment rose 41.7 per cent from the fourth quarter of 2023, it added.

Chinese officials have been stepping up efforts to attract investors, with Premier Li Qiang vowing to keep up efforts to improve the business environment and welcome investment from foreign businesses.

Foreign investors are concerned about a broader new anti-espionage law, exit bans, and raids on consultancies and due diligence firms.

Foreign investment in China’s manufacturing industry in the first three months reached 81.1 billion yuan, accounting for 26.9 per cent of total FDI, the ministry said.

Foreign investment in China’s accommodation and catering industry soared 84.7 per cent year on year, while that in the construction industry rose 17.5 per cent, and investment in the wholesale and retail industry rose 2.2 per cent, it said.

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The ministry did not say which sectors saw year-on-year declines. REUTERS