Half of Japanese firms downbeat on China’s economy: survey

HALF of Japanese companies invested in China expect the economy to get worse this year, according to a new survey, and the vast majority don’t plan to increase investment. 

Some 50 per cent of the 1,741 Japanese companies surveyed by the Japanese Chamber of Commerce and Industry in China said they expected the economy to get worse in 2024, an increase from the 37 per cent who said that at the end of last year. Another 34 per cent said China’s economy will perform this year the same as it did last year, with only 15 per cent of firms expecting it to improve.

China’s economy grew faster than 5 per cent in the first three months of the year, but that doesn’t seem to have encouraged companies to step up investment. Some 44 per cent of the surveyed firms said they would cut outlays this year, and another 40 per cent planned to keep them unchanged. Those numbers were broadly unchanged from the survey at the end of 2023.

The continued pessimism from Japan’s firms about the opportunities its neighbour offers bode poorly for China’s efforts to attract foreign companies back after the pandemic. The flow of investment into China from the whole world fell 56 per cent last quarter from a year earlier, according to official data released last week. The amount from Japan dropped 1.2 per cent to the lowest level for the first quarter in comparable data back to 2014.

The survey conducted from mid-March to mid-April didn’t provide a margin of error.

Japan is the most important single source of investment for China, accounting for about 6 per cent of the total stock of foreign direct investment into the country in 2021, according to a recent report from scholars including Bert Hofman, previously the head of the World Bank’s office in China. BLOOMBERG