China relaxes capital controls to entice badly needed foreign investment

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China is allowing foreigners in Shanghai and Beijing to move their money freely into and out of the country, in a significant move toward relaxing its strict capital controls as it tries to woo overseas investors.

The news was announced just weeks after official data showed foreign direct investment in the country had hit a record quarterly low amid a slump in business confidence. Foreign investors — either individuals or companies — at the Shanghai pilot free trade zone, where tens of thousands of firms are located, can remit their funds without any restriction or delay, according to a statement from the city government posted Thursday.

A gauge of FDI in China plunged in the second quarter, hitting its lowest level since 1998, when records began, according to data published by the State Administration of Foreign Exchange last month. Separate statistics published by the commerce ministry Sunday showed that its measure of FDI dropped more than 5% during the first eight months of 2023, compared with a year earlier. Low confidence Business confidence among American firms in China appears to have plummeted.

 

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