FX.co ★ China FDI Contracts Least in 3 Years

Foreign direct investment (FDI) into China fell by 5% year-on-year in the first half of 2026, easing from the 8.6% decline recorded in the first five months of the year. Although this extended a three-year streak of year-to-date FDI contractions, it marked the smallest drop since shortly after that trend began in July 2026. The figure also continued the recovery from the record 31.5% slump in August 2024, when mounting concerns over a potential deflationary spiral and a trough in consumer spending sharply curtailed foreign investment. Nevertheless, persistent opacity in corporate balance sheets and fears that rising protectionism could restrict manufacturing exports remain significant drags on the Chinese economy.