China’s economy has a Xi Jinping problem as foreign investment dries up

• China is signaling to the rest of the world that it has reopened for business.
• Both Elon Musk and Janet Yellen recently visited Beijing.
• But with less money flowing into China, foreign investors may be alienated by Mr. Xi’s authoritarianism.

China wants the world to know it has reopened.

As warning signs mount that China’s post-pandemic economic recovery has stalled, Beijing has issued an apparent “come here and invest” plea to the West.

“I would like to take this opportunity to reaffirm China’s commitment to opening up,” Chinese Premier Li Qiang said last month at a World Economic Forum event in the eastern port of Tianjin, in no apparent attempt to drum up some enthusiasm.

In recent months, Beijing has also welcomed prominent American guests, including climate envoy john kerryTreasury Secretary Janet Yellen and Tesla CEO Elon Musk, although the latter’s claim that the ruling Communist Party may one day be replaced by an artificial intelligence-driven “digital superintelligence” may not be the leadership. The kind of assurance one looks for.

The reason why China says this is simple: foreign investment has dried up.

International investors, businesses and governments spent just $20bn in China in the first quarter of this year, down from $100bn in the first three months of 2022, according to research firm Rhodium Group.

Xi Jinping’s Iron Fist may be responsible for the sharp decline.

At a Communist Party meeting late last year, China’s president made an apparent seizure of power, introducing a new leadership team made up of political allies and allies. Publicly disrespecting his business-friendly predecessor.

Panicked investors responded with a $6 trillion blowout of Chinese stocks, while onshore equities RMB drop against Dollar. (strictly managed currency Continues to lose ground against the dollar since then).

This year alone, Beijing Chips from U.S. semiconductor maker Micron bannedsend State police went to the Shanghai offices of US consulting giant Bain & Company.and continued to suppress About $1.1 trillion has been wiped off the total market capitalization of local big tech companies.

The government also continues to impose tough capital controls, making it difficult for foreigners to get money out of the country, with emerging markets guru Mark Mobius saying earlier this year he would “Investing in China is very, very cautious“Due to restrictions.

Neither Xi Jinping’s authoritarian, hard-line rule mentions a “commitment to openness,” so despite China’s renewed efforts to woo the West, China probably shouldn’t expect a rebound in foreign investment anytime soon.