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Charted: Chinese FDI Inflows Hit Multi-Year Lows

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See this visualization first on the Voronoi app.

A bar chart tracking Chinese FDI inflows in USD billions between 2016 and 2023.

Charted: Chinese FDI Inflows Hit Multi-Year Lows

This was originally posted on our Voronoi app. Download the app for free on iOS or Android and discover incredible data-driven charts from a variety of trusted sources.

The Chinese economy has thrown up several red flags in 2023 and now foreign investors are losing confidence in the world’s second-largest economy.

Data accessed via the Peterson Institute for International Economics and sourced from China’s State Administration of Foreign Exchange (SAFE) shows foreign direct investment (FDI) inflows have hit multi-year lows.

ℹ️ FDI occurs when an investor in one country acquires significant and lasting financial interest in a foreign enterprise. This data includes the IPO value of Chinese companies in foreign markets.

Foreign Investors Hit “Sell” on China in 2023

Aside from a broadly slowing economy, the Peterson Institute’s analysis highlights other key reasons why FDI inflows have scaled back so dramatically this year.

Firstly, geopolitical tensions (in the form of an escalating chip war) between the U.S. and China are worrying foreign investors—many of them American-headquartered companies with a presence in China, holding back on investments in local companies.

Secondly, the closure of due diligence firms (which allow foreign investors to make informed decisions on Chinese companies) along with a new national security law aimed at restricting cross-border data flows have disincentivized foreign investors from betting big if they wanted to.

YearFDI InflowsYoY Change
2011$280BN/A
2012$241B-13.93%
2013$291B+20.75%
2014$268B-7.90%
2015$242B-9.70%
2016$175B-27.69%
2017$166B-5.14%
2018$235B+41.57%
2019$187B-20.43%
2020$253B+35.29%
2021$344B+35.97%
2022$180B-47.67%
2023
Q1-Q3
$15B-91.67%

Meanwhile, huge spikes in FDI inflows between 2018 and 2021 indicate the success of Chinese companies listing on American securities exchanges, which SAFE includes in its data. However, crackdowns from both Chinese and U.S. securities regulators in 2022 turned the tap off briefly. Despite the restrictions being since removed, new listings have not bounced back.

Another Red Flag for the Chinese Economy

The Peterson Institute’s comparison of gross and net FDI flows found a nearly $100 billion shortfall—which means foreign firms are selling their Chinese investments, adding yet another red flag for the economy.

This slowdown is now having a ripple effect across the region—for Japan, South Korea, and Thailand’s economies—whose export sectors rely on substantial Chinese demand. Nations in sub-saharan Africa will also feel the pinch as Chinese sovereign lending continues to fall, already past the lowest it’s been in two decades.

Meanwhile, on a broader scale, Chinese growth contributes to one-third of world economic growth, which means the global economy will miss growth projections made last year—when economists had a more optimistic view of the world’s second-largest economy.

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United States

Charted: U.S. Median House Prices vs. Income

We chart the ever-widening gap between median incomes and the median price of houses in America, using data from the Federal Reserve from 1984 to 2022.

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A cropped chart with the ever-widening gap between median house prices vs. income in America, using data from the Federal Reserve from 1984 to 2022.

Houses in America Now Cost Six Times the Median Income

This was originally posted on our Voronoi app. Download the app for free on iOS or Android and discover incredible data-driven charts from a variety of trusted sources.

As of 2023, an American household hoping to buy a median-priced home, needs to make at least $100,000 a year. In some cities, they need to make nearly 3–4x that amount.

The median household income in the country is currently well below that $100,000 threshold. To look at the trends between median incomes and median house prices through the years, we charted their movement using the following datasets data from the Federal Reserve:

Importantly this graphic does not make allowances for actual household disposable income, nor how monthly mortgage payments change depending on the interest rates at the time. Finally, both datasets are in current U.S. dollars, meaning they are not adjusted for inflation.

Timeline: Median House Prices vs. Income in America

In 1984, the median annual income for an American household stood at $22,420, and the median house sales price for the first quarter of the year came in at $78,200. The house sales price-to-income ratio stood at 3.49.

By pure arithmetic, this is the most affordable houses have been in the U.S. since the Federal Reserve began tracking this data, as seen in the table below.

A hidden caveat of course, was inflation: running rampant towards the end of the 70s and the start of the 80s. While it fell significantly in the next five years, in 1984 the 30-year fixed rate was close to 14%, meaning a significant chunk of household income went to interest payments.

DateMedian House
Sales Price
Median Household
Income
Price-to-Income Ratio
1984-01-01$78,200$22,4203.49
1985-01-01$82,800$23,6203.51
1986-01-01$88,000$24,9003.53
1987-01-01$97,900$26,0603.76
1988-01-01$110,000$27,2304.04
1989-01-01$118,000$28,9104.08
1990-01-01$123,900$29,9404.14
1991-01-01$120,000$30,1303.98
1992-01-01$119,500$30,6403.90
1993-01-01$125,000$31,2404.00
1994-01-01$130,000$32,2604.03
1995-01-01$130,000$34,0803.81
1996-01-01$137,000$35,4903.86
1997-01-01$145,000$37,0103.92
1998-01-01$152,200$38,8903.91
1999-01-01$157,400$40,7003.87
2000-01-01$165,300$41,9903.94
2001-01-01$169,800$42,2304.02
2002-01-01$188,700$42,4104.45
2003-01-01$186,000$43,3204.29
2004-01-01$212,700$44,3304.80
2005-01-01$232,500$46,3305.02
2006-01-01$247,700$48,2005.14
2007-01-01$257,400$50,2305.12
2008-01-01$233,900$50,3004.65
2009-01-01$208,400$49,7804.19
2010-01-01$222,900$49,2804.52
2011-01-01$226,900$50,0504.53
2012-01-01$238,400$51,0204.67
2013-01-01$258,400$53,5904.82
2014-01-01$275,200$53,6605.13
2015-01-01$289,200$56,5205.12
2016-01-01$299,800$59,0405.08
2017-01-01$313,100$61,1405.12
2018-01-01$331,800$63,1805.25
2019-01-01$313,000$68,7004.56
2020-01-01$329,000$68,0104.84
2021-01-01$369,800$70,7805.22
2022-01-01$433,100$74,5805.81

Note: The median house sale price listed in this table and in the chart is from the first quarter of each year. As a result the ratio can vary between quarters of each year.

The mid-2000s witnessed an explosive surge in home prices, eventually culminating in a housing bubble and subsequent crash—an influential factor in the 2008 recession. Subprime mortgages played a pivotal role in this scenario, as they were issued to buyers with poor credit and then bundled into seemingly more attractive securities for financial institutions. However, these loans eventually faltered as economic circumstances changed.

In response to the recession and to stimulate economic demand, the Federal Reserve reduced interest rates, consequently lowering mortgage rates.

While this measure aimed to make homeownership more accessible, it also contributed to a significant increase in housing prices in the following years. Additionally, a new generation entering the home-buying market heightened demand. Simultaneously, a scarcity of new construction and a surge in investors and corporations converting housing units into rental properties led to a shortage in supply, exerting upward pressure on prices.

As a result, median house prices are now nearly 6x the median household income in America.

How Does Unaffordable Housing Affect the U.S. Economy?

When housing costs exceed a significant portion of household income, families are forced to cut back on other essential expenditures, dampening consumer spending. Given how expanding housing supply helped drive U.S. economic growth in the 20th century, the current constraints in the country are especially ironic.

Unaffordable housing also stifles mobility, as individuals may be reluctant to relocate for better job opportunities due to housing constraints. On the flip side, many cities are seeing severe labor shortages as many lower-wage workers simply cannot afford to live in the city. Both phenomena affect market efficiency and productivity growth.

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