China FDI surges despite slowing economy
Print Edition
China’s inbound foreign investment rose at the quickest pace in 28 months in July, reflecting renewed confidence among investors despite the slowing economic growth.
Also, China’s non-financial outbound direct investment gained 20 percent to US$50.6 billion in the January-July period, after surging 29 percent in the first half.
Foreign direct investment in the country surged 24.1 percent year-on-year to US$9.41 billion last month, after rising 20.1 percent in June, the Ministry of Commerce said yesterday.
Between January and July, China attracted US$71.4 billion in FDI — up 7.1 percent in annualized terms.
“This shows that foreign investors are still very confident about China’s investment environment, particularly in the service industry,” Shen Danyang, a ministry spokesman, said yesterday.
Shen said the strong growth in June and July was partly due to several major projects, like the two joint ventures set up by Dreamworks Animation in Shanghai with a total investment of US$118 million.
He also attributed the robust growth to a low basis from a year ago, but warned that the monthly 20 percent-plus increase may not last the rest of the year.
FDI inflows into the manufacturing sector in the first seven months fell 2.4 percent, while that in the service sector gained 15.8 percent.
Nomura economist Zhang Zhiwei said yesterday that property investment was the main factor in driving up the FDI growth. Property accounts for 41 percent of the service sector FDI, while the latter makes up half of the total FDI.
“We believe this is evidence that the government has effectively loosened its policy in the property sector,” Zhang said.
FDI from the United States rose 11 percent in the first seven months while that from the euro zone gained 16.7 percent, led by a 58.3 jump from Germany, the ministry said.
Ashland Inc, an American specialty chemicals company, will continue to invest in China despite the current slowdown, Ted Harris, senior vice president of the company, said earlier this month after opening a plant in Changzhou, near Shanghai.
He cited growing demand from urbanization, clean energy development and the automobile industry in China as the reasons for his optimism.
China has been stepping up efforts to attract foreign investment after FDI inflows fell last year for the first time since the global financial crisis. The State Council plans to suspend some laws on foreign investment in new free trade zones, including Shanghai, to cut bureaucracy.
China’s exports rose to a better-than-expected 5.1 percent in July, reversing the 3.1 percent decline in June, while imports jumped 10.9 percent, compared to June’s 0.7 percent decrease.
Shen said exports and imports are expected to stabilize further in the second half after the State Council announced trade facilitation measures. A survey among the business community shows trade will continue to be strong this month.
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