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China FDI up 5.2% in July year-on-year on M&A: government

Foreign investment into China rose 5.2 percent in July compared to the previous year, largely on the back of mergers and acquisitions by overseas firms, the commerce ministry said on Wednesday.

Overall foreign direct investment (FDI), which excludes financial sectors, was US$8.22 billion last month, the ministry said, and US$76.63 billion in the first seven months of the year, a 7.9 percent increase.

"The amount and the proportion of foreign capital mergers and acquisitions rose sharply between January and July," it said in a statement.

The proportion of M&A activity in FDI rose to 18.2 percent in the January-July period, it added, up from 4.6 percent in the same seven months a year ago.

China's outbound overseas direct investment (ODI) last month was US$7.5 billion, a sharp decline of 18.6 percent compared to a year earlier and the second consecutive monthly fall after one of 15.5 percent in June, the ministry said.

Commerce ministry spokesman Shen Danyang attributed the drops to a high comparative base.

"There were several big-ticket ODI projects in June and July last year," he told reporters, adding that there were no similarly large deals in those months this year.

"Many ODI projects were in the energy and oil sectors in the past," he added. "Investors this year have been taking a wait-and-see stance due to the slumps in prices of oil and minerals and other international commodities."

Full year ODI growth is still expected to be 10-15 percent or "even higher", he said.

ODI in the January-July period rose 20.8 percent year-on-year to US$63.5 billion.

FDI growth has slowed in recent years owing to factors including rising costs, competition from Southeast Asian countries, and concerns over official investigations into foreign companies.

- ODI passes US$100 bn -

China drew a total of US$119.6 billion of FDI in 2014, up 1.7 percent, while ODI was up 14.1 percent at US$102.9 billion, passing the US$100 billion mark for the first time.

In the January-July period, investment from the 28-member European Union (EU) into China rose 18.4 percent to US$4.53 billion, the ministry said.

Investment from France, which is included in the EU total, rose 78.6 percent to US$810 million. From Japan, with which China is in disputes over territory and wartime history, it fell 24.2 percent to US$2.14 billion.

And it fell sharply from the United States, dropping 29.2 percent to US$1.28 billion, the figures showed.

Hong Kong is by far the biggest investor in China, accounting for US$56.52 billion of the seven-month total. It showed a gain of 14.5 percent during the period.


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