China officials warn of challenges for foreign trade, investment

China’s foreign trade environment is “extremely severe” and the outlook for investment is also challenging this year as the global economy slows and faces uncertainty, according to Ministry of Commerce officials.

Issues include the rising risk of a global economic recession, slowing growth in external demand and the changing landscape of global supply chains, Li Xingqian, head of the ministry’s foreign trade department, said at a Thursday press conference.

The country also needs to “stabilize the role of exports in supporting the national economy,” Li said. 

The drop in China’s overseas shipments deepened in December as global demand continued to wane, and as the country’s messy exit from Covid Zero caused disruptions to production and logistics. 

That trend is set to continue this year as demand continues to slow, and as central banks around the world keep raising interest rates to curb surging inflation. 

Meanwhile, the environment for attracting foreign investment is “very complex and severe,” said Meng Huating, a commerce ministry official in charge of foreign investment. Global economic growth is sluggish, she said at the same Thursday press conference, adding that unfavorable factors are still fermenting.

Investment into China slumped in the final two months of last year by the most on record. Inbound FDI fell 33% in November and almost 29% in December, according to Bloomberg calculations based on data from the commerce ministry.

Still, Meng expressed confidence that China would be able to expand the scale of foreign investment into the country and improve its quality this year. She cited an improving domestic economy and better business environment.