Advertisements
//
you're reading...
Trade & Investment

Foreign capital exiting China at an accelerated pace


Workers at a clothing processed production line at a factory in Gansu province

Workers at a clothing processed production line at a factory in Gansu province

With the Chinese economy slowing down and its population dividend diminishing, foreign capital has been exiting the market at an accelerated pace, leading to concerns over a possible large-scale capital flight which may impact domestic banking capital and forex reserves, according to Duowei News, a media outlet run by overseas Chinese.

A recent case in point is the decision of Citizen China, which produces Japanese Citizen watches, to fold its production base in Guangzhou, on the heels of Microsoft which announced on Dec. 17 its decision to close the mobile-phone factories of Nokia, under its auspices, in Beijing and Dongguan by the Spring Festival moving facilities to Nokia’s factory in Hanoi.

A number of other foreign enterprises are scheduled to join the exodus this year, including Panasonic, Sharp, Daikin, and TDK, all Japanese firms, which plan to transfer some capacity from China back to Japan or to other countries. Others, such as Uniqlo, Nike, Foxconn, Funai, Clarion, and Samsung, are setting up new factories in Southeast Asia and India, while scaling down their Chinese operations.

The foreign firms are leaving as factors which attracted them to China in the first place are quickly disappearing, including cheap resources, land, and labor, as domestic production costs have surged in the wake of decades of rapid economic development.

In addition, labor quality has been deteriorating, as many employers complain of lack of professional skills and working ethics among young Chinese laborers born after the 1980s or 1990s, a far cry from the industrious and obedient labor force of earlier times.

The exodus of foreign enterprises may sour the domestic investment climate, triggering a massive capital flight. According to the People’s Bank of China, capital outflow topped US$92.1 billion in the second half of 2014, with Citibank estimating the amount at US$250-270 billion in the fourth quarter alone.

The capital outflow has strained the credit supply at domestic banks, prompting the People’s Bank of China to cut interest rates and deposit reserve requirements, in a bid to inject liquidity into the banking system.

Source: Want China Times – Foreign manufacturer exodus from China

 

Advertisements

About Craig Hill

General Manager at Craig Hill Training Services * Get an Australian diploma by studying in your own country * Get an Australian diploma using your overseas study and work experience * Diplomas can be used for work or study in Australia and other countries. * For more information go to www.craighill.net

Discussion

5 thoughts on “Foreign capital exiting China at an accelerated pace

  1. That’s what happens when dictatorship and emperor reigning returns. Happens right now in a neighbouring smiling country, too. One can only hope this power-hunger will continue, as they will solve the world’s problem all by themselves. 😉

    Like

    Posted by You know me already ;-) | February 23, 2015, 9:40 am
  2. “In addition, labor quality has been deteriorating, as many employers complain of lack of professional skills and working ethics among young Chinese laborers born after the 1980s or 1990s, a far cry from the industrious and obedient labor force of earlier times.”

    Very true about the young Chinese workers, including those from more affluent families. They all believe they are kings and queens, are entitled to much, but on the other hand have no work ethic, no skills and no loyalty. They leech off their doting parents to survive. It doesn’t take Alexis de Tocqueville to forcast major problems in China’s future.

    Like

    Posted by Questioner | February 23, 2015, 11:33 am

Trackbacks/Pingbacks

  1. Pingback: Microsoft closing two China factories and relocating to Vietnam; another 9,000 jobs lost | China Daily Mail - March 2, 2015

  2. Pingback: A massive Chinese industry is flashing warning signs that the world cannot ignore | China Daily Mail - November 2, 2015

  3. Pingback: What could really disrupt China’s economy? | China Daily Mail - November 13, 2015

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Advertisements

Type 407 Training Visas

Get An Australian Diploma

Learn How To Sell Real Estate To Chinese Buyers

Sell Your Real Estate To Chinese Investors

China Daily Mail

China Daily Mail is not affiliated in any way with The China Daily or the government of the People's Republic of China.

Enter your email address to receive an email each time an article is published, or join our RSS feed. 100% FREE.

Want to write for China Daily Mail?

Read "Contributor Guidelines" above to join our team of 68 contributors. Write news or opinion about issues in China, or post photos and video. Promote your own site.

Recent Posts

China Daily Mail Stories Have Been Featured In:

%d bloggers like this: