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Eye on Asia | What makes China’s latest wave of foreign capital withdrawal different? It’s structural
- Trade war, rising costs and economic reforms deemed too little, too late are behind China’s latest foreign capital flights
- What is different this time is that the withdrawals are part of a migration of the industrial chain out of China
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With the outbreak of the trade war with the United States and the imposing of US tariffs, China’s foreign trade and investment environment is facing great changes. Some foreign investors have chosen to withdraw to avoid tariffs and evade sanctions.
At a July 11 news conference in Beijing, commerce ministry spokesman Gao Feng said he had noticed reports of affected business confidence at some foreign firms in the country but that the government will continue to safeguard the business environment.
In China, the number of enterprises with foreign investment and the overall scale of foreign capital have yet to decrease significantly.
But the withdrawing of large foreign companies is becoming noticeable. South Korea's Samsung and Japan's Olympus and Epson have closed many of their factories in China and may withdraw completely from the Chinese market. Carrefour is beating a retreat, along with Tesco and Wal-Mart, in selling significant stakes in its Chinese operations.
The scale of foreign investment in high-end manufacturing is shrinking fast, according to our analysis, and there is almost no new investment in some Shanghai industrial parks.
China is not without its advantages in attracting foreign investment; its massive and constantly upgrading market is its biggest draw. After decades of rapid development, China has a gross domestic product of over 90 trillion yuan (US$13 trillion), and per capita GDP exceeding US$9,600, meaning a large and growing middle class.
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