Foreign direct investment (FDI) into China dropped by more than a sixth year-on-year to a two-year low last month, the government said yesterday, but denied any link to Beijing’s multiple probes into foreign companies.
FDI — which excludes investment in financial sectors — fell 16.95 percent in the month to US$7.81 billion, the commerce ministry said, its lowest since July 2012, when it was US$7.579 billion.
The fall saw FDI in the first seven months decline 0.35 percent to US$71.14 billion, eliminating a small increase at the half-year stage.
Chinese authorities have 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 companies.
However, Chinese Ministry of Commerce spokesman Shen Danyang (沈丹陽) denied any connection between the investigations and the fall in FDI.
“It is only normal that there is volatility of FDI in individual months when China steps up efforts to balance the economic structure,” he told reporters. “It is not sufficient enough to reflect the general trend. It must not be linked to the anti-monopoly probes into some foreign invested companies or be associated with other baseless speculations.”
“All market players should operate their business according to the law. They should be punished according to the law and be subject to appropriate legal penalties if they violate the law,” he added.
In the first seven months of the year, investment from Japan crashed 45.4 percent to US$2.83 billion, with that from the EU slumping 17.5 percent to US$3.83 billion and from the US down a similar 17.4 percent to US$1.81 billion.
However, investment from South Korea — which has been enjoying closer diplomatic ties with China — rose 34.6 percent to US$2.92 billion.
Investment from the UK, the home of troubled pharmaceutical giant GlaxoSmithKline, soared 61.2 percent to US$730 million.
For this year as a whole, Shen said FDI is still expected to grow at a similar pace to last year, when it rose 5.3 percent year-on-year to US$117.6 billion.
“Foreign companies will not be scared away by investigations into the cases,” Shen said.
China’s own overseas investment in non-financial sectors soared 84.9 percent year-on-year last month, to US$9.21 billion, the ministry said.
For the first seven months of the year it was up 4 percent to US$52.55 billion.
“This is the first growth since February this year, after the impact of big projects last year waned,” the ministry said in a statement.
Chinese investment into the EU leaped by 293.1 percent year-on-year for the period, and into Japan by 160.9 percent, the ministry said, without giving totals.
Investment into the US was up 12.8 percent to US$2.82 billion.
Shen said China’s overseas investment would grow about 10 percent this year, more than the increase in FDI.
“It will be a new normal for overseas investment to exceed FDI,” he said.
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