Chinese companies’ foreign investments jumped more than fourfold in the first quarter as the government encourages spending overseas to help cut a surging trade gap.
Foreign direct investments rose to US$19.3 billion in the period, Vice Minister of Commerce Chen Jian (陳健) said yesterday at an investment forum in Beijing. That compares with US$18.7 billion for the whole of last year.
China has pledged to help companies invest overseas as it seeks to curb a trade surplus that threatens to overheat the world’s fastest growing major economy.
The inflation rate has already hit an 11-year high, partly because of a flood of cash from Chinese exports.
Premier Wen Jiabao (溫家寶) is balancing efforts to curb inflation against the risk of an economic slump as overseas demand for Chinese goods weakens.
China’s export growth slowed to 22 percent last month after gaining 31 percent in March, figures derived from Ministry of Commerce data showed. Last month’s trade surplus was about US$16.8 billion, the data showed.
World Bank’s chief economist Justin Lin (林毅夫) said yesterday that China will see only a “limited” impact from the slowdown in the US, the world’s biggest economy, as most goods it sells there are labor-intensive items needed for daily use.
“Chinese exports to the US will remain strong and won’t see negative growth” this year and next, Lin told an investment forum in Beijing.
The US is China’s biggest trading partner after the EU.
On Saturday, the People’s Bank of China Governor Zhou Xiaochuan (周小川) told a forum in Shanghai that China must save less and boost consumption to narrow the trade surplus.
Zhou raised interest rates six times last year and ordered banks to set aside larger reserves this year to curb loan growth that helped fuel inflation.