China's FDI climbs to US$18b
Source: Agencies |
March 16, 2011, Wednesday
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Print Edition
Print Edition
CHINA drew over a quarter more foreign investment in the first two months of the year compared to 2010, as firms flocked in to get a foothold in the world's fastest-growing major economy.
The 27.1 percent jump in foreign direct investment from a year ago to US$17.8 billion, unveiled by the Ministry of Commerce yesterday, was also a sign that China's economic activity stayed brisk despite a slew of policy tightening steps over the past half year.
Although investors say they worry about China's rising labor costs, market barriers and patchy protection of intellectual property rights, many firms are still willing to look past them in exchange for booming growth.
Ting Lu, an economist at Merrill Lynch-Bank of America, said the jump in foreign investment might have been fuelled by extra spending from factories moving inland from more expensive coastal cities.
Rising salaries and property prices along China's eastern coast, home to manufacturing centers such as Guangdong Province, have prompted many cost-conscious firms to move factories inland where wages and the cost of living are lower.
"If there's a relocation, there is a lot of investment," said Lu, adding that some foreign investment could include speculative funds trying to sneak into China as legitimate investment.
Foreign investment in China, which surged after it joined the World Trade Organization in 2001, has recovered strongly after being hit hard by the global economic slowdown.
FDI inflows have revived globally as the 2008 financial crisis ended.
Too much foreign investment can also be a headache, adding to the vast pool of money in China that has driven inflation near its fastest in over two years. The main source of that cash is China's bulging trade surplus, but large-scale FDI inflows add to the problem.
The 27.1 percent jump in foreign direct investment from a year ago to US$17.8 billion, unveiled by the Ministry of Commerce yesterday, was also a sign that China's economic activity stayed brisk despite a slew of policy tightening steps over the past half year.
Although investors say they worry about China's rising labor costs, market barriers and patchy protection of intellectual property rights, many firms are still willing to look past them in exchange for booming growth.
Ting Lu, an economist at Merrill Lynch-Bank of America, said the jump in foreign investment might have been fuelled by extra spending from factories moving inland from more expensive coastal cities.
Rising salaries and property prices along China's eastern coast, home to manufacturing centers such as Guangdong Province, have prompted many cost-conscious firms to move factories inland where wages and the cost of living are lower.
"If there's a relocation, there is a lot of investment," said Lu, adding that some foreign investment could include speculative funds trying to sneak into China as legitimate investment.
Foreign investment in China, which surged after it joined the World Trade Organization in 2001, has recovered strongly after being hit hard by the global economic slowdown.
FDI inflows have revived globally as the 2008 financial crisis ended.
Too much foreign investment can also be a headache, adding to the vast pool of money in China that has driven inflation near its fastest in over two years. The main source of that cash is China's bulging trade surplus, but large-scale FDI inflows add to the problem.
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