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Foreign direct investment (FDI) into Asia fell in 2016, for the first time since 2012.

Data from the UN shows that FDI shrank by 15% to US$443bn, amid a huge drop in investment into Hong Kong (from US$174bn to US$108bn). Much of the investment into Hong Kong is eventually bound for elsewhere in the region, due to the city’s low-tax and tariff regime.

The figures reflect the ongoing macroeconomic uncertainty in the region, spearheaded by rising geopolitical tensions and slowing trade and economic activity in China. Lower investment in Hong Kong suggests lower confidence in the economy of the region at large.

Financial services investment in Hong Kong and China continued to grow, but a shift from low-end towards high-end manufacturing has led to less money being pumped into production facilities around the Pearl River Delta.

Rising costs are a deterrent to manufacturing companies, who in some cases are looking elsewhere in the region, but in others, are looking to invest closer to home. Many European companies are investing in production facilities in Eastern Europe, while American firms are often reshoring or near-shoring to Mexico.

“China is moving up the value chain. It’s now focusing more on the high-end segment and at the same time releasing the low-end segment to other countries,” Jong Woo Kang, lead economist at the Asian Development Bank (ADB) tells GTR. “In garments, Bangladesh is now accounting for a large share of the ready-made garment market, from China. In electronics, Vietnam is taking a growing share.”

However, the figures suggest that the levels of investment seen in China over recent decades are far from being matched elsewhere. A 20% slump in FDI to Southeast Asia, led by a 13% slump in Singapore (another investment hub), reflects this.

A series of multinational divestments hit Indonesia, Malaysia and Thailand, but the report singles Vietnam and the Philippines out for bucking the trend.

Generally speaking, though, the data reflects testing times for trade in Asia. Investors are spooked by geopolitical headwinds in the South China Sea and in North Korea. Fears of a trade war between the US and China are also playing heavily on people’s minds . When you add to this a growing sense of unease about local economic conditions, the fall in FDI is understandable.

One barometer by which to gauge the regional economic health is the situation with payments: if companies can’t pay for their goods, it’s generally not a good sign. Data from credit insurer Coface shows that payment conditions weakened in 2016 across Australia, China, Hong Kong, India, Japan, Singapore, Taiwan and Thailand.

64% of companies surveyed by the company experienced overdue payments, with 12.5% reporting overdues exceeding 120 days – the highest level for four years. The riskiest sectors were named as being construction, industrial machinery, electronics, IT, telecoms and metals.

“2017 is set to be another challenging year, riddled with increasing global uncertainties linked to China’s deceleration. This will be compounded by the fiscal challenges experienced by commodity exporting countries and monetary policy tightening in the US. Taking all of these factors into consideration, overall company payment experience in the eight selected regional economies is likely to remain weak,” says Carlos Casanova, economist for Asia Pacific at Coface.

The UN data did suggest, however, that Asia is becoming more important in terms of its outbound FDI. China became the world’s second-largest investor last year, for the first time, with FDI outflows growing by 44% to US$183bn.

This figure is unlikely to be repeated in 2017, however, with the Chinese government introducing limits on outbound M&A activity, and also on the amount of capital that can leave China, which has had a huge impact on trade finance flows.

Read the full report from the UN here.