Japanese companies in China come into 2024 with doubts still on their mind on growth momentum of the world’s second largest economy after cutting investment or keeping it flat last year due to slow economic recovery and demand.
Bloomberg reported by citing the survey from the Japanese Chamber of Commerce and Industry in China by stating that the majority of Japanese firms in China said that they do not have a positive outlook for 2024 with only a quarter of firms doing the survey said that they expect the economy to improve.
Official data from the government body late last year showed that foreign direct investment was falling to the lowest level in four years in the year through November despite the effort from Beijing to stimulate its economy to bring back foreign investment.
A high competitiveness in the auto industry in China, especially in the EV sector, made it more difficult for Japanese firms to strive last year. The survey showed that almost 40% of Japanese machinery companies said that they cut investment last year, which increased by five percentage points from earlier surveys.
The survey also indicated that less than 30% of the Japanese firms saw sales rise in the final quarter of last year, while 47% said sales deteriorated. Only 25% of the firm said that profit rose during that period.
The head of the International Monetary Fund (IMF) warned China that it needs structural reforms to continue to open up its economy in order to avoid a fairly significant decline in growth rates, while the dept-piling property sector still needed fixing.