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China's FDI inflow drops amid economic slowdown

English.news.cn   2013-01-16 14:28:28            

BEIJING, Jan. 16 (Xinhua) -- Foreign direct investment (FDI) into China dropped in December for a seventh consecutive month amid economic slowdown in the country and the rest of the world.

The Ministry of Commerce said at a monthly news conference on Wednesday China used 11.7 billion U.S. dollars of overseas investment last month, down 4.5 percent year on year.

The pace of decline slowed from 5.4 percent in November. In 2012, the monthly FDI figures dropped 11 times year on year, with a slight increase only in May.

Total FDI into the country in 2012 declined 3.7 percent from one year earlier to 111.72 billion U.S. dollars, according to ministry spokesman Shen Danyang.

The decline of overseas investment is in line with market anticipation as economic recovery all around the world faltered last year.

"There was not a very high expectation for FDI last year," said Li Jianfeng, an analyst with Caida Securities Co., headquartered in northern China's Hebei Province.

Li said sluggish global economic growth had led to insufficient investment all around the globe.

Lu Zhengwei, chief economist with the Industrial Bank, said the willingness of foreign capital to invest in China fell markedly last year as tempered growth in China cut into the profitability of both domestic and overseas enterprises.

The decline echoed the slowdown in China's economic growth last year.

Data from the National Bureau of Statistics showed that China's economy grew by 7.4 percent year on year in the third quarter of 2012, slowing for the seventh consecutive quarter. Key economic figures for the last quarter are scheduled to be released on Friday.

However, the economy has shown some signs of stabilization in recent months.

China's Purchasing Managers' Index (PMI), a key barometer for the manufacturing sector, remained at 50.6 percent in December, according to official data released early this month.

The PMI figure stood above the boom-or-bust line of 50 percent for a third consecutive month, demonstrating a trend of moderate economic recovery.

"China's economic growth will be generally sound in 2013," Minister of Commerce Chen Deming said here on Monday in a meeting with large foreign enterprises investing in China.

Chen predicted that FDI into China this year will stay at the level of 2012 as domestic consumption and investment are likely to maintain steady growth.

Caida Securities Co.'s Li Jianfeng agreed that China will attract slightly more foreign investment in 2013 due to the country's improving economic prospects.

"Representatives of foreign companies investing in China are still positive about China's investment climate and expressed willingness to continue to expand their investment," said Shen, who also attended the foreign enterprises meeting.

Shen said that China will keep both its FDI policies and the total FDI volume generally stable this year, and strive to improve the quality of how foreign investment is used.

Last year, FDI from the United States increased 4.5 percent year on year to 3.13 billion U.S. dollars, while that from Japan surged 16.3 percent to 7.38 billion U.S. dollars.

However, FDI from the eurozone fell 3.8 percent to 6.11 billion U.S. dollars, Shen said.

FDI into the service sector last year continued to exceed that into manufacturing, demonstrating the optimization of China's industrial structure, Shen said.

Foreign investment into China's service industry dropped 2.6 percent last year to 53.84 billion U.S. dollars, representing 48.2 percent of the total FDI.

Investment into the manufacturing sector retreated 6.2 percent to 48.87 billion U.S. dollars, accounting for 43.7 percent of the total, the ministry said.

China's central regions saw FDI inflow climbing 18.5 percent year on year, while investment in its west and east dropped by 14.3 percent and 4.2 percent, respectively.

The country approved the establishment of 24,925 new foreign-funded companies last year, down 10.1 percent from a year ago, according to the ministry.

 

Editor: Hou Qiang
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