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China FDI falls 6.1% in March for 5th straight month
By Wang Yanlin |
April 17, 2012, Tuesday
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Online Edition
Online Edition
Foreign direct investment in China dropped for a fifth straight month in March as European investors continued to curb their spending.
In comparison, capital from Asia and the United States picked up against the broad trend.
Inbound foreign investment fell 6.1 percent from a year earlier to US$11.7 billion last month, the Ministry of Commerce said today.
The decline was steep compared with a 0.9 percent drop in February.
Investment from the 27-member European Union shrank 31.2 percent in March.
Ministry Spokesman Shen Danyang said China faces new challenges this year in attracting foreign investment as domestic economy is slowing; other emerging markets are competing for foreign investment; and developed countries expect to retain capital at home.
"It seems global investors are charting new routes for their funds when a changing world offers many new opportunities," Shen told a press conference in Beijing. "China targets at a stabilized scale of foreign investment this year and will continue to improve its foreign investment structure to encourage more quality projects."
Less investment from Europe and a high comparative base led to foreign investment contraction in China in recent months, Shen said. Also, the correction in China's property market and the government's rein-in policies deterred foreign investors as nearly one-fourth of foreign funds were channeled into China's real estate sector in the past two years.
During the first quarter, foreign capital flowing into China's property sector lost 6.3 percent, compared with a 38.6 percent surge a year earlier.
In total, China attracted US$29.4 billion foreign investment in the January-March period, down 2.8 percent on an annual basis.
But on a positive note, investment from the US rose 10.1 percent to US$893 million in March and that from Japan expanded 13.2 percent.
Xue Jun, an analyst at CITIC Securities Co, said although China is losing the edge of cheap labor, its vast consumer market remains a magnet for foreign investment.
"Investors are looking for markets that can generate demand and produce profits amid a sluggish global economy, and China is the place," Xue said.
China's gross domestic product growth weakened to 8.1 percent in the first quarter, the slowest in nearly three years. But economists said that would be the bottom of this round of economic slowdown, forecasting the pace may pick up to around 8.5 percent in the current quarter.
In comparison, capital from Asia and the United States picked up against the broad trend.
Inbound foreign investment fell 6.1 percent from a year earlier to US$11.7 billion last month, the Ministry of Commerce said today.
The decline was steep compared with a 0.9 percent drop in February.
Investment from the 27-member European Union shrank 31.2 percent in March.
Ministry Spokesman Shen Danyang said China faces new challenges this year in attracting foreign investment as domestic economy is slowing; other emerging markets are competing for foreign investment; and developed countries expect to retain capital at home.
"It seems global investors are charting new routes for their funds when a changing world offers many new opportunities," Shen told a press conference in Beijing. "China targets at a stabilized scale of foreign investment this year and will continue to improve its foreign investment structure to encourage more quality projects."
Less investment from Europe and a high comparative base led to foreign investment contraction in China in recent months, Shen said. Also, the correction in China's property market and the government's rein-in policies deterred foreign investors as nearly one-fourth of foreign funds were channeled into China's real estate sector in the past two years.
During the first quarter, foreign capital flowing into China's property sector lost 6.3 percent, compared with a 38.6 percent surge a year earlier.
In total, China attracted US$29.4 billion foreign investment in the January-March period, down 2.8 percent on an annual basis.
But on a positive note, investment from the US rose 10.1 percent to US$893 million in March and that from Japan expanded 13.2 percent.
Xue Jun, an analyst at CITIC Securities Co, said although China is losing the edge of cheap labor, its vast consumer market remains a magnet for foreign investment.
"Investors are looking for markets that can generate demand and produce profits amid a sluggish global economy, and China is the place," Xue said.
China's gross domestic product growth weakened to 8.1 percent in the first quarter, the slowest in nearly three years. But economists said that would be the bottom of this round of economic slowdown, forecasting the pace may pick up to around 8.5 percent in the current quarter.
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