China's FDI flow turns negative for first time

In what looks like one of the most concrete manifestations of the "China-plus one" sentiment in the global economy, China's foreign direct investment (FDI) flow turned negative in the July-September quarter for the first time since 1998, the earliest period for which this data is available.

- Roshan Kishore and Rajeev Jayaswal

While the Chinese state media maintained a brave face and reiterated that China continues to be a major global FDI destination, this trend, if it persists, could open new opportunities for many emerging market economies including India.

The China-plus-one approach refers to potential investors hedging their bets by keeping an tional supply chain source to avoid over-reliance on the Chinese manufacturing ecosystem.

China's direct investment liabilities were a deficit of $11.8 billion in the quarter ending September, as per preliminary balance of payment data according to a Reuters report. In simple terms, the data means that FDI coming into China was lower than the FDI which has flown out of the country. Most experts believe this to be a manifestation of worsening sentiment among global firms vis-a-vis the business and investment climate in China on account for greater state intervention in the domestic economy and rising geopolitical tensions with advanced countries especially US.