The most significant decrease in investment in China has occurred in history.

Foreign direct investment (FDI) into China has rapidly declined in the past quarter and shows a continuous downward trend. Foreign investment inflows into China hit a historic low not seen in 25 years, primarily due to concerns over political factors stemming from China's policy of wealth redistribution and increased competition with Western nations. This has raised worries among foreign investors and put pressure on the yuan.

The State Administration of Foreign Exchange (SAFE) revealed that FDI inflows dwindled to just under $4.9 billion in the second quarter. Meanwhile, Chinese companies' foreign investments resulted in a significant net FDI outflow of $34.1 billion, marking a 5.6% decrease and the sharpest decline in three years.

Tensions have escalated further due to chip supply constraints. In the recent weeks leading up, Japan, the United States, and Europe have limited the sale of high-tech chip manufacturing equipment to Chinese companies. Simultaneously, China has felt the direct impact of reduced exports of raw materials due to the decline in Chinese goods and the contraction of domestic production, influenced by the Zero Covid policy.

John Ramey, a partner at the law firm Bucalter, specializing in international business agreements and manufacturing structures, stated, "I don't have a single client looking to invest in China. Not one, not even a single person. The perspective on China now is diametrically opposed to what it was five years ago. Everyone is looking to sell their China operations or, if they are sourcing from China, they are looking for other places to do it."

China's foreign exchange reserves unexpectedly increased in July, rising by $11.3 billion to $3.204 trillion, surpassing the $3.200 trillion forecast by Reuters analysts and the $3.193 trillion reported in June. Additionally, China's gold reserves also increased to $135.36 billion from $129.93 billion in June.

The People's Bank of China (PBOC) is reportedly considering lowering the required reserve ratio (RRR) in the coming weeks to stimulate domestic economic growth. Simultaneously, the government is exploring measures to ease real estate policies and is working on a plan to address the government's debt issues through the issuance of 650 billion yuan worth of bonds.

Techical analysis data (5H)

Resistance: 7.2335, 7.2550, 7.2952

Support: 7.1718, 7.1316, 7.1101

Source: Investing.com