China's Economic Prospects Dim as Western De-risking Strategies Take Effect

Foreign investors diversify sourcing strategies amid concerns over China's long-term growth, leading to the country's first-ever quarterly deficit in foreign direct investment.

• China recorded its first-ever quarterly deficit in foreign direct investment in July-September, indicating capital outflow pressure.
• Foreign investors are increasingly diversifying their sourcing strategies, reducing their dependence on China due to geopolitical concerns and a slowing economy.
• Executives are expressing concerns about China's long-term growth prospects for the first time since the country opened up to foreign investments four decades ago.
• More than two-thirds of CEOs surveyed by The Conference Board said China's demand has not returned to pre-COVID levels, with 40% expecting a decrease in capital investments in the country over the next six months.
• Despite the challenges, some companies, especially in the retail sector, continue to target China's large market.

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