China experienced a record $168 billion net foreign direct investment (FDI) outflow in 2024, marking the largest capital flight since 1990, according to data from the State Administration of Foreign Exchange (SAFE). This downturn follows years of declining foreign investment, which peaked at $344 billion in 2021.

While international firms withdraw capital, Chinese companies are rapidly increasing overseas investments, with $173 billion sent abroad last year. The situation worsens as the U.S.-China trade war reignites, with new 10% tariffs imposed by President Donald Trump and China retaliating against major U.S. firms, including Google, Apple, and Broadcom.

The economic slowdown, rising geopolitical tensions, and China’s shift to electric vehicles have further deterred foreign investors, forcing some to scale back operations or exit the market. Japan, once a major investor in China, is now favoring the U.S., channeling a record $75.6 billion into American markets in 2024.

Despite Beijing’s efforts to court foreign investment, including tax breaks and visa waivers, confidence in China’s economy continues to wane. However, portfolio investors remain optimistic, with Chinese stocks rallying 25% since September, fueled by government stimulus measures.

The trade surplus remains strong, with a $422 billion current-account surplus in 2024, highlighting China’s export dominance and growing global trade tensions. As capital outflows continue, Beijing faces mounting pressure to restore investor confidence and stabilize its economy.

Stay tuned for further updates as we monitor these critical developments shaping the future.