Despite challenges abroad, China continues to attract foreign investment

China witnessed a net inflow of foreign investment last year even amid challenges posed by overseas central banks' interest rate hikes, official data showed.

A net total of $62.1 billion in equity-based foreign direct investment flowed into China last year, with a noticeable surge in the fourth quarter compared to the previous one, the State Administration of Foreign Exchange said on 18th of Feb.

Preliminary estimates show that China also attracted net foreign inflow of securities investment in 2024. In the fourth quarter, the size of net inflow reached the highest level in almost two years, SAFE said.

Foreign investors' holdings of Chinese domestic bonds increased for four consecutive months from September to December, leading to a net increase of more than $60 billion in holdings during the period, the administration said.

"These data indicate that more foreign investors are investing in China, developing their business here and allocating renminbi-denominated assets," said Wang Chunying, deputy head of SAFE.

Wang said that market participants widely anticipate that central banks in major developed economies will start a cycle of interest rate cuts this year, making the external financial conditions more favorable for China.

Foreign investors are expected to continue boosting holdings in Chinese bonds as the US Federal Reserve may start rate cuts in May, said a research note from China Galaxy Securities.