Foreign Investment Drops by 30% in the First Three Quarters: He Lifeng’s Awkward Role

The image shows the Hong Kong Stock Exchange. (Photo by Song Xianglong / Dajiyuan)

October 26, 2024 - With China’s economy stagnating and foreign investment continuing to decline, actual foreign capital utilization in the first nine months of this year dropped by 30% year-on-year, a fact left unmentioned by Party media. He Lifeng, the CCP’s Vice Premier in charge of economic affairs, has been described by foreign media as an awkward "gatekeeper" due to his close relationship with Xi Jinping. Instead of welcoming foreign investment, He Lifeng’s role is to shield the CCP system from Western influence; however, as the economy declines, he has no choice but to engage with foreigners.

Actual Foreign Investment Down 30% Year-on-Year, People’s Daily Avoids Reporting

On October 25, People’s Daily reported, citing the Ministry of Commerce, that from January to September 2024, China had established 42,108 new foreign-invested enterprises, an increase of 11.4% year-on-year, with actual foreign capital utilization amounting to RMB 640.6 billion.

However, this RMB 640.6 billion figure represents a 30.4% year-on-year decrease, which People’s Daily did not mention.

Data from last year shows that from January to September 2023, China established 37,814 new foreign-invested enterprises, a year-on-year increase of 32.4%, while actual foreign capital utilization was RMB 919.97 billion, an 8.4% decrease year-on-year.

Current affairs commentator Li Linyi told Epoch Times that for several years, the CCP’s official statistics have consistently shown an increase in the number of new foreign-invested enterprises. However, actual foreign capital utilization has continued to decline, indicating that while the number of new enterprises may be exaggerated or fabricated, actual investment — the real figure — has drastically dropped this year. Even state media refrained from reporting on it due to the severity of the situation.

Amid economic weakness and geopolitical tensions, the CCP has intensified monitoring of foreign enterprises under the pretext of "national security," leading many foreign companies to downsize or even close their operations in China.

On October 21, the global asset management giant Fidelity International announced plans to lay off 500 employees in China.

McKinsey & Company reportedly cut around 500 Chinese positions this month and had previously reduced its number of CCP-related clients.

In August, U.S.-based multinational technology company HP moved its personal computer production out of China.

Earlier this year, Bridgestone, Japan’s largest tire manufacturer, shut down its factory in Shenyang, laying off over 1,000 employees.

Since 2023, several global brands have exited China, including Canon, Samsung, Sony, Toshiba, Nikon, Amazon, LinkedIn, the American software developer Mintz, and Astellas Pharma. Many of these companies have shifted their supply chains to Thailand, the Philippines, or back to their home countries.

The Awkward "Gatekeeper" Role: He Lifeng Forced to Spend More Time Engaging Foreign Investors

The Wall Street Journal reported yesterday that the CCP has high-level officials specifically assigned to interact with foreigners, with Vice Premier He Lifeng being the latest to take on this role. During U.S. Treasury Secretary Janet Yellen’s visit to Beijing earlier this year, she sought to meet with He Lifeng to persuade Xi Jinping on China’s overcapacity issues, as He could deliver information directly to Xi.

The report stated that He Lifeng, responsible for economic and financial affairs, was initially focused on countering Western sanctions. Xi assigned him the task of serving as a gatekeeper, protecting the CCP system from Western influence rather than welcoming foreign investment.

The report noted that under He’s leadership, the Chinese economy has progressively worsened, and trade tensions have intensified. This year, investment in Chinese factories, stores, and other tangible assets from abroad has plummeted by over 30% — a striking shift. With foreign investment withdrawing, He has been forced to establish connections with the West.

He Lifeng’s background is noteworthy due to his close relationship with Xi Jinping from their early years in Fujian. While serving in Tianjin, He led large projects intended to boost the city’s economy, which ultimately left Tianjin with substantial debt. After heading the National Development and Reform Commission, He directed hundreds of billions of dollars into high-speed rail, airports, and water tunnels, leading to a continuous debt increase across China.

Western business executives who have met with He Lifeng believe he tends to think like Xi Jinping, favoring state planning and control — a contrast to his predecessors, who skillfully balanced China’s shift toward market-oriented reforms.

With the U.S. presidential election approaching and the cracks in China’s economy becoming increasingly apparent, He’s task has become more urgent. Reports indicate that in recent months, he has doubled the time allocated for meetings with foreign business leaders.

However, there is skepticism about whether He, trusted by Xi as a gatekeeper, will try to persuade Xi to ease his wariness of the West due to economic needs.

Professor Feng Chongyi from the University of Technology Sydney previously told Epoch Times that former Vice Premier Liu He was somewhat of a technocrat with close ties to the economic and market-oriented community. In contrast, He Lifeng, appointed as a loyal Party official, only echoes Xi Jinping’s political slogans and agenda without bringing anything new to the table. The measures he implements are unlikely to address the crisis.

Editor: Zheng Haoyu