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China's FDI rises sharply in Nov amid hot money concerns
By Wang Yanlin |
December 15, 2010, Wednesday
|
Online Edition
Online Edition
Growth of foreign direct investment in China posted a sudden and sharp acceleration last month, which may have been boosted by inflows of more speculative money, analysts said.
November's foreign investment climbed 38.17 percent from a year earlier to US$9.7 billion, the Ministry of Commerce said today. The pace picked up significantly from the increase of 7.86 percent in October, 6.14 percent in September and 1.38 percent in August.
"The acceleration is unexpected and very unusual," said Chen Wei, an analyst at China Minzu Securities Co. "The growth of foreign investment used to be flat at the year's end, because it is not regular time for investors to make big decisions."
And last November's base of US$7 billion was not really low when China's foreign investment came in the middle of a rapid recovery from the blow of the global financial crisis, analysts said.
"One explanation could be more speculative fund was sneaking into the country, betting on a stronger yuan and more interest rate increases in China," Chen said.
The United States last month announced it would carry out another round of easing monetary policy, which may push liquidity into emerging markets for quicker return.
Also, many developed countries kept their interest rate at a near-zero point to stimulate their troubled economy, making it hard for emerging markets to raise interest rates in fear of more liquidity swarming in.
China's central bank chose to lift the reserve requirement ratio again last Friday to curb inflation, instead of an interest rate rise. The People's Bank of China has increased the reserve requirement for six times this year, and the latest one was the third in five weeks.
November's foreign investment climbed 38.17 percent from a year earlier to US$9.7 billion, the Ministry of Commerce said today. The pace picked up significantly from the increase of 7.86 percent in October, 6.14 percent in September and 1.38 percent in August.
"The acceleration is unexpected and very unusual," said Chen Wei, an analyst at China Minzu Securities Co. "The growth of foreign investment used to be flat at the year's end, because it is not regular time for investors to make big decisions."
And last November's base of US$7 billion was not really low when China's foreign investment came in the middle of a rapid recovery from the blow of the global financial crisis, analysts said.
"One explanation could be more speculative fund was sneaking into the country, betting on a stronger yuan and more interest rate increases in China," Chen said.
The United States last month announced it would carry out another round of easing monetary policy, which may push liquidity into emerging markets for quicker return.
Also, many developed countries kept their interest rate at a near-zero point to stimulate their troubled economy, making it hard for emerging markets to raise interest rates in fear of more liquidity swarming in.
China's central bank chose to lift the reserve requirement ratio again last Friday to curb inflation, instead of an interest rate rise. The People's Bank of China has increased the reserve requirement for six times this year, and the latest one was the third in five weeks.
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