The reason behind corporations withdrawing billions of profits from China

According to official data, foreign businesses are withdrawing money from China at a faster rate than they are investing in the country. Several factors have contributed to this trend, including China's slowing economy, low interest rates, and tensions with the US. These concerns have led companies to seek alternative markets. In the third quarter of 2023, China recorded a deficit of $11.8 billion in foreign investment, indicating that companies are moving their profits out of the country rather than reinvesting them. Some businesses, like Swiss manufacturer Oerlikon, have cited the economic slowdown and uncertainties as reasons for withdrawing funds. However, China still remains an important market for many firms. The COVID-19 pandemic has also posed challenges for businesses operating in China, disrupting supply chains. The European Union Chamber of Commerce in China has observed that instead of reinvesting earnings in the country, businesses are choosing to spend the money elsewhere where they can obtain higher investment returns. While some believe that this withdrawal of profits does not reflect dissatisfaction with China, but rather the maturation of investments, there is still uncertainty surrounding interest rates and China-US relations. The upcoming meeting between Chinese President Xi Jinping and US President Joe Biden is being closely watched, as it could have an impact on foreign investment in China. Overall, until businesses gain more certainty, the drag on foreign investment is expected to continue.