If you’re wondering why foreign direct investment inflows have fallen sharply and why consumers are cautious about spending, part of the reason may be increased uncertainty about the economy and economic policy.
Here are three measures of uncertainty: text-based Policy Uncertainty from South China Morning Post, mainland Chinese newspapers, and World Uncertainty Index based on Economist Intelligence Unit reports.
figure 1: EPU-China based on mainland Chinese newspapers (blue, left scale), EPU-China based on SCMP (tan, left scale), WUI-China (green, right scale). Light orange shading represents Xi Jinping; gray shading indicates recession peak-to-trough dates as defined by ECRI. source: PolicyUncertainty.comand World Uncertainty Index.comand ECRI.
Jadet, Jude and Chin (reactive ion implantation2023) (discussed here) shows the negative impact of WUI on FDI inflows.
