Foreign Investment in China Drops by 20%

Elderly people rest and chat at a park in Beijing, China January 16, 2024. (Reuters)
Elderly people rest and chat at a park in Beijing, China January 16, 2024. (Reuters)
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Foreign Investment in China Drops by 20%

Elderly people rest and chat at a park in Beijing, China January 16, 2024. (Reuters)
Elderly people rest and chat at a park in Beijing, China January 16, 2024. (Reuters)

China will make greater efforts to diffuse debt risks of financing platforms, said Chinese premier Li Qiang in a meeting focusing on mitigating risks of local government debt on Friday.

China will resolutely block the path for irregular and disguised debts and strictly prevent the risk of newly-added debts, said Li.

The Commerce ministry said on Friday that foreign investment into China fell 19.9% in the first two months of 2024 from the amount in January-February last year to 215 billion yuan ($30 billion).

China on Tuesday unveiled new steps to arrest a slowdown in foreign investment, including expanding market access and relaxing some rules.

Overseas firms have turned sour on China since it enacted ultra-strict COVID curbs during the pandemic then suddenly abandoned them in late 2022, with concerns over the business environment, a shaky economic recovery and rising geopolitical tensions with the West weighing on confidence.

A series of prolonged regulatory crackdowns on sectors from technology to education have also rattled domestic and foreign investors, adding to unease over policy transparency in China.

US Commerce Secretary Gina Raimondo said last year that American businesses had told her that China was becoming “uninvestible.”

In 2023, foreign direct investment into China shank 8% year-on-year.

Of the foreign investment in the first two months, 71.44 billion yuan, or a third of the total, went into China's high-tech industries, including high-tech manufacturing, the ministry said.

Foreign investment in China's construction sector rose 43.6% year-on-year, while investment in wholesale and retail industries grew 14.5%, it added.

In return, China’s central government accelerated spending at the start of the year, a sign it’s taking on more financing responsibility to support the economy and to avoid worsening local government debt risks, Bloomberg reported.

Its general public expenditure jumped 14% from a year earlier to 482.8 billion yuan ($66.8 billion) in January and February combined, the fastest pace for the period in five years, according to data provided by the Ministry of Finance.

Bloomberg said Beijing is gradually shifting the responsibility for supporting economic growth to central government from local officials — a way to maintain the level of investment while defusing local debt risks.

Local governments have been struggling after a property crisis reduced a critical source of income from land sales, and a slowing economy weighed on tax revenues.

The latest data shows Beijing intends to “underpin growth while preventing risks,” said Xing Zhaopeng, senior China strategist at Australia & New Zealand Banking Group Ltd.

Central and local authorities spent almost 700 billion yuan in the first two months on agriculture, forest and irrigation-related issues, as well as urban and rural community development. This is up 22% from a year earlier.

In a separate development, China's securities regulator launched onsite inspections of some mutual fund companies as part of efforts to strengthen management of the industry, unnerving fund managers.

The securities watchdog, under newly appointed Chairman Wu Qing, vowed a week ago to set up a “textbook-style” supervision model to regulate China's $3.8 trillion mutual fund industry, according to Reuters.

The latest round of inspections, conducted without notice by branches of the China Securities Regulatory Commission (CSRC), covered daily operations, training, and strengthening internal Chinese Communist Party functions, the 21st Century Business Herald reported on Friday. It did not name the asset managers inspected.

In response to a Reuters query, CSRC said: “It's regular on-site inspection that we conduct every year.”

The CSRC branches inspected fund companies based outside their regions, which the article said can prevent local interference. Regulators have recently cracked down on computer-driven “quant” private funds.



IMF and Arab Monetary Fund Sign MoU to Enhance Cooperation

The MoU was signed by IMF Managing Director Dr. Kristalina Georgieva and AMF Director General Dr. Fahad Alturki - SPA
The MoU was signed by IMF Managing Director Dr. Kristalina Georgieva and AMF Director General Dr. Fahad Alturki - SPA
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IMF and Arab Monetary Fund Sign MoU to Enhance Cooperation

The MoU was signed by IMF Managing Director Dr. Kristalina Georgieva and AMF Director General Dr. Fahad Alturki - SPA
The MoU was signed by IMF Managing Director Dr. Kristalina Georgieva and AMF Director General Dr. Fahad Alturki - SPA

The International Monetary Fund (IMF) and the Arab Monetary Fund (AMF) signed a memorandum of understanding (MoU) on the sidelines of the AlUla Conference on Emerging Market Economies (EME) to enhance cooperation between the two institutions.

The MoU was signed by IMF Managing Director Dr. Kristalina Georgieva and AMF Director General Dr. Fahad Alturki, SPA reported.

The agreement aims to strengthen coordination in economic and financial policy areas, including surveillance and lending activities, data and analytical exchange, capacity building, and the provision of technical assistance, in support of regional financial and economic stability.

Both sides affirmed that the MoU represents an important step toward deepening their strategic partnership and strengthening the regional financial safety net, serving member countries and enhancing their ability to address economic challenges.


Saudi Chambers Federation Announces First Saudi-Kuwaiti Business Council

File photo of the Saudi flag/AAWSAT
File photo of the Saudi flag/AAWSAT
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Saudi Chambers Federation Announces First Saudi-Kuwaiti Business Council

File photo of the Saudi flag/AAWSAT
File photo of the Saudi flag/AAWSAT

The Federation of Saudi Chambers announced the formation of the first joint Saudi-Kuwaiti Business Council for its inaugural term (1447–1451 AH) and the election of Salman bin Hassan Al-Oqayel as its chairman.

Al-Oqayel said the council’s formation marks a pivotal milestone in economic relations between Saudi Arabia and Kuwait, reflecting a practical approach to enabling the business sectors in both countries to capitalize on promising investment opportunities and strengthen bilateral trade and investment partnerships, SPA reported.

He noted that trade between Saudi Arabia and Kuwait reached approximately SAR9.5 billion by the end of November 2025, including SAR8 billion in Saudi exports and SAR1.5 billion in Kuwaiti imports.


Leading Harvard Trade Economist Says Saudi Arabia Holds Key to Success in Fragmented Global Economy

Professor Pol Antràs speaks during a panel discussion at the AlUla Conference for Emerging Market Economies (Asharq Al-Awsat).
Professor Pol Antràs speaks during a panel discussion at the AlUla Conference for Emerging Market Economies (Asharq Al-Awsat).
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Leading Harvard Trade Economist Says Saudi Arabia Holds Key to Success in Fragmented Global Economy

Professor Pol Antràs speaks during a panel discussion at the AlUla Conference for Emerging Market Economies (Asharq Al-Awsat).
Professor Pol Antràs speaks during a panel discussion at the AlUla Conference for Emerging Market Economies (Asharq Al-Awsat).

Harvard University economics professor Pol Antràs said Saudi Arabia represents an exceptional model in the shifting global trade landscape, differing fundamentally from traditional emerging-market frameworks. He also stressed that globalization has not ended but has instead re-formed into what he describes as fragmented integration.

Speaking to Asharq Al-Awsat on the sidelines of the AlUla Conference for Emerging Market Economies, Antràs said Saudi Arabia’s Vision-driven structural reforms position the Kingdom to benefit from the ongoing phase of fragmented integration, adding that the country’s strategic focus on logistics transformation and artificial intelligence constitutes a key engine for sustainable growth that extends beyond the volatility of global crises.

Antràs, the Robert G. Ory Professor of Economics at Harvard University, is one of the leading contemporary theorists of international trade. His research, which reshaped understanding of global value chains, focuses on how firms organize cross-border production and how regulation and technological change influence global trade flows and corporate decision-making.

He said conventional classifications of economies often obscure important structural differences, noting that the term emerging markets groups together countries with widely divergent industrial bases. Economies that depend heavily on manufacturing exports rely critically on market access and trade integration and therefore face stronger competitive pressures from Chinese exports that are increasingly shifting toward alternative markets.

Saudi Arabia, by contrast, exports extensively while facing limited direct competition from China in its primary export commodity, a situation that creates a strategic opportunity. The current environment allows the Kingdom to obtain imports from China at lower cost and access a broader range of goods that previously flowed largely toward the United States market.

Addressing how emerging economies should respond to dumping pressures and rising competition, Antràs said countries should minimize protectionist tendencies and instead position themselves as committed participants in the multilateral trading system, allowing foreign producers to access domestic markets while encouraging domestic firms to expand internationally.

He noted that although Chinese dumping presents concerns for countries with manufacturing sectors that compete directly with Chinese production, the risk is lower for Saudi Arabia because it does not maintain a large manufacturing base that overlaps directly with Chinese exports. Lower-cost imports could benefit Saudi consumers, while targeted policy tools such as credit programs, subsidies, and support for firms seeking to redesign and upgrade business models represent more effective responses than broad protectionist measures.

Globalization has not ended

Antràs said globalization continues but through more complex structures, with trade agreements increasingly negotiated through diverse arrangements rather than relying primarily on multilateral negotiations. Trade deals will continue to be concluded, but they are likely to become more complex, with uncertainty remaining a defining feature of the global trading environment.

Interest rates and artificial intelligence

According to Antràs, high global interest rates, combined with the additional risk premiums faced by emerging markets, are constraining investment, particularly in sectors that require export financing, capital expenditure, and continuous quality upgrading.

However, he noted that elevated interest rates partly reflect expectations of stronger long-term growth driven by artificial intelligence and broader technological transformation.

He also said if those growth expectations materialize, productivity gains could enable small and medium-sized enterprises to forecast demand more accurately and identify previously untapped markets, partially offsetting the negative effects of higher borrowing costs.

Employment concerns and the role of government

The Harvard professor warned that labor markets face a dual challenge stemming from intensified Chinese export competition and accelerating job automation driven by artificial intelligence, developments that could lead to significant disruptions, particularly among younger workers. He said governments must adopt proactive strategies requiring substantial fiscal resources to mitigate near-term labor-market shocks.

According to Antràs, productivity growth remains the central condition for success: if new technologies deliver the anticipated productivity gains, governments will gain the fiscal space needed to compensate affected groups and retrain the workforce, achieving a balance between addressing short-term disruptions and investing in long-term strategic gains.