IN 2024, $168 BILLION EXITED CHINA
Foreign direct investment in China fell $168 billion in 2024, the biggest single year decline since 1990, according to official data. After hitting an all-time high of $344 billion in 2021, FDI into China has slumped in recent years as international companies have pulled out and domestic firms have moved money abroad in search of better returns. In 2024, investors sent $173 billion overseas, but only $4.5 billion entered the country, the lowest amount since 1992. The UN estimates there was a 29% drop in FDI into China last year, compared with an 8% drop globally. Low interest rates have incentivized multinationals to repatriate their cash. Meanwhile, China is investigating foreign firms like Google, has already blacklisted PVH Corp (the owner of Calvin Klein), and is looking into Apple Inc., Broadcom Inc., and Synopsys Inc. (Bloomberg, February 14, 2025)
PRC CRANES RAISE HOMELAND SECURITY CONCERN AT U.S. PORTS
A yearlong Congressional investigation has uncovered unauthorized cellular modems hidden in cranes at U.S. ports made by the Shanghai Zhenhua Heavy Industries Company (ZPMC), a PRC state-owned military contractor that built 80% of America's ship-to-shore cranes. The report found that these modems bypass port firewalls, allowing everything the cranes do to be monitored by Beijing, while some cranes can even be controlled and shut down remotely. The Biden administration committed $20 billion to upgrading port security and replacing ZPMC cranes. "It is the number one cyber risk facing the U.S. right now. They'd hit a port, particularly on the West Coast, because that's how we move material, that's how we move equipment. That's how, in some cases, we're gonna move personnel. The Chinese are preparing for war," said Chris Krebs, former Director of the Cybersecurity & Infrastructure Security Agency. (CBS, February 11, 2025)
CHINA MERGES HUNDREDS OF BANKS TO ALLEVIATE BAD LOANS
In the most sweeping consolidation in a quarter-century, last year at least 290 rural Chinese banks and rural cooperatives were merged with larger regional lenders to help alleviate extensive bad debt in the small banking sector. China's rural banking sector has 3700 firms with a combined $7.8 trillion in assets as of the end of June 2024, roughly one-third the size of the U.S. In one larger merger in September 2023, the Liaoning provincial government set up Liaoning Rural Commercial Bank with 20.8 billion yuan in registered capital, which then absorbed 36 local small rural lenders struggling with soaring bad loans. Liaoning Rural Commercial Bank's balance sheet has not been made public. (MSN, February 12, 2025)
CHINA SMUGGLES PARTS FOR RUSSIAN DRONES – ESTONIA
China supplies about 80% of high-tech and dual use components for drones to the Russian armed forces, according to Estonia's Foreign Intelligence Service (EFIS). "The Chinese government facilitates bilateral cooperation and covert transfers of dual-use components through private companies," it noted in its most recent annual report. The offices of Western companies in China are probably involved in the schemes. "Chinese interests here lie in preventing Russia from losing the war in Ukraine as such an outcome would represent a victory for the U.S.," according to Kaupo Rosin, director general of EFIS. (Reuters, February 12, 2025)
BEIJING TO UNDERWRITE VIETNAM'S $8.3 BILLION RAILWAY
Vietnam plans to take Chinese loans to help fund a new $8.3 billion railway linking the two countries, its transport minister, Nguyen Hong Minh, has said. Seeking to upgrade its aging and outdated railway systems, Vietnam has approached China for funding and technology. The 243-mile railway, which will transport passengers and cargo at a speed of 99 mph, will run from the border city of Lao Cai through the capital, Hanoi, to Haiphong, the largest seaport in northern Vietnam. The country's parliament is scheduled to vote on the railway project, and construction is expected to start this year and be completed by 2030. (Bangkok Post, February 14, 2025)
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