China struggles to attract new foreign investment

<p>Kia ora,</p><p>Welcome to Thursday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.</p><p>I'm David Chaston and this is the international edition from Interest.co.nz.</p><p>And today we lead with news China is struggling to attract new foreign direct investment.</p><p>But first, American <a href="https://www.census.gov/construction/nrc/pdf/newresconst.pdf" target="_blank"><strong>new housing starts</strong></a> were expected to be a bit soft in June, but they fell more than expected, down -8.0% from May and down -15.3% below the June 2022 level. It was weak all round with single-family housing starts, which account for the bulk of homebuilding, dropped by -7.0% and starts for multi-unit homebuilding went down by -11.6%. Building consent levels retraced too.</p><p>But there was a minor uptick in <a href="https://www.mba.org/news-and-research/newsroom/news/2023/07/19/mortgage-applications-increase-in-latest-mba-weekly-survey" target="_blank"><strong>new mortgage applications</strong></a> last week, up +1.0% from a week earlier, but they are still -21% lower than year ago levels. Perhaps the weekly gain related to the fall-back in the benchmark mortgage interest rate which spiked to over 7% the week before last but fell back to levels it has broadly been at since early June.</p><p>China confirmed that its <a href="http://www.mofcom.gov.cn/" target="_blank"><strong>foreign direct investment fell</strong></a> in the six months to June by -2.7%. The rise in June from May was only +US$13.7 bln, the lowest increment since the pandemic for that period.</p><p>That continuing weakness underscores the overall lackluster direction of their economy. Yesterday they had to <a href="http://www.news.cn/politics/2023-07/19/c_1129758014.htm" target="_blank"><strong>issue a pledge</strong></a> to improve conditions for private businesses in an attempt to reassure the business sector they are serious about finding ways to rekindle their economic momentum. It is going to take more that