Wed, Nov 19, 2014 - Page 15 News List

Growth in foreign direct investment in China slows


A woman works in a factory in Lianyungang in China’s Jiangsu Province on Monday.

Photo: AFP

Growth in foreign investment into China slowed last month, the government said yesterday, amid a slowdown in the world’s second-largest economy and concerns over business risks.

Foreign direct investment (FDI) — which excludes financial sectors — totaled US$8.53 billion for the month, the Ministry of Commerce said, up 1.3 percent year-on-year.

The figure compares with a gain of 1.9 percent in September, which came after a four-year-low in August of US$7.20 billion.

For the first 10 months of the year, FDI amounted to US$95.88 billion, the ministry said, a decline of 1.2 percent year-on-year.

China has in recent months launched anti-monopoly, pricing and other inquiries into foreign firms in sectors ranging from auto manufacturing and pharmaceuticals to baby milk.

The probes have raised concerns among investors that Beijing is targeting overseas firms, which the ministry has repeatedly denied.

However, China’s appeal as an investment destination has declined in recent years in the face of rising labor and land costs and competition from Southeast Asian countries such as Vietnam.

Chinese officials have also blamed source country factors, such as Washington’s drive to move industrial production back to the US.

China’s economy expanded 7.3 percent in the July-to-September quarter, slower than the 7.5 percent expansion in the previous three months and the worst result since 2009 at the height of the global financial crisis.

In the first 10 months FDI fell 42.9 percent from Japan to US$3.69 billion, 23.8 percent from the US to US$2.32 billion, 16.2 percent from the EU to US$5.38 billion, and 15.2 percent from ASEAN to US$5.41 billion.

Investment from the UK and South Korea bucked the trend, rising 32.4 percent and 26.4 percent to US$1.18 billion and US$3.29 billion respectively.

Meanwhile, investment by Chinese firms overseas fell last month after a huge jump in September.

Overseas direct investment (ODI) was down 12.2 percent year-on-year at US$6.92 billion, but was up 17.8 percent for the first 10 months at US$81.88 billion.

ODI had soared 90.5 percent in September to US$9.79 billion.

China has been actively acquiring foreign assets, particularly energy and resources, to power its economy, with firms encouraged to “go out” and make overseas acquisitions to gain market access and international experience.

Officials have said that outward investment could exceed FDI this year. Over the 10-month period, Chinese investment in the US jumped 30.5 percent to US$4.19 billion, the ministry said, while that to ASEAN gained 3.9 percent to US$3.99 billion.

Chinese investment in the EU nearly tripled, the ministry said, while that to Japan more than doubled and to Hong Kong it increased 22 percent, the ministry said, without providing totals.

It said that investment in Australia fell 16.7 percent during the period, while that to Russia crashed 78.8 percent, due to a high base effect from last year.

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