Foreign direct investment in China rose 19.83 percent last month year-on-year, data showed yesterday, with analysts saying robust growth and expectations of a stronger currency attracted overseas investors.
For the first seven months of the year, China took a total of US$69.19 billion in foreign direct investment, up 18.57 percent from the same period a year earlier, the Chinese Ministry of Commerce said in a statement.
Foreign companies invested US$8.3 billion in the world’s second-largest economy last month, the statement said.
In June, the figure reached US$12.86 billion, representing a rise of just 2.83 percent from a year earlier, due mainly to a slowing of investment from the US and the EU, the ministry said earlier.
The ministry did not explain reasons for the strong performance last month nor did it provide a breakdown of sources of the investment.
BETTER RETURNS
Analysts said strong growth in China and expectations of a stronger yuan had attracted a growing number of foreign investors hoping for a better return on their money as the US and Europe remain in the doldrums.
However, growing concern that the flood of credit was helping fuel inflation had triggered a round of monetary tightening as Beijing tries to rein in soaring consumer costs.
Inflation hit a three-year high of 6.5 percent last month despite the government hiking interest rates five times since October last year and curbing the amount of money banks can lend.
‘SOFT LANDING’
China will achieve a “soft landing” even as growth moderates after the government tightened monetary policy, the Conference Board said as its main indicator for the economy rose.
The New York-based researcher’s leading economic index for China increased 1 percent in June, it said in a release yesterday. The index climbed 0.6 percent in May and 0.3 percent in April.
“The economy is significantly moderating right now and also over the next couple of months,” Bart van Ark, the organization’s chief economist, told Bloomberg Television from New York. “We still expect it to be pretty much a soft landing.”
The nation’s expansion may slow to 9.2 percent in the third quarter from 9.5 percent in the previous three months, the China Securities Journal reported yesterday, citing the State Information Center.
Beyond six months, the Chinese economy may face “more problems” as a result of bank lending that remains at levels that are probably not sustainable, van Ark said.
The nation needs to shift to more of a consumer economy and to build more “social infrastructure rather than the hard infrastructure,” he said.
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