China's slowing economy puts brakes on investment
By Wang Yanlin |
July 18, 2012, Wednesday
|
Print Edition
Print Edition
FOREIGN direct investment in China plunged again last month, ending a short-lived rebound in May, due to rising uncertainties in the global market and a slowing domestic economy.
It fell 6.9 percent from a year earlier to US$12 billion last month, the Ministry of Commerce said yesterday.
The decline followed an increase of 0.05 percent in May.
Shen Danyang, a ministry spokesman, said stagnant economic growth around the world, and especially the lack of a proper solution to the eurozone debt crisis, was continuing to dissuade investors.
According to a recent United Nations survey, multinational companies reported a record high level of cash holdings, but expressed little willingness to invest in the near future.
Shen added that "the weakening conditions in the domestic market also weigh on China's strength in absorbing foreign capital, when production costs are rising rapidly and the supply of land is shrinking."
In the first half, foreign investors set up a total of 11,705 new enterprises in China with an investment of US$59.1 billion, a contraction of 3 percent compared to a year earlier.
Of that, foreign investment in the property sector slumped 12.4 percent, the sharpest in all categories, ministry data showed.
In comparison, foreign investment in the finance industry jumped 73.3 percent annually in the first six months, and in information technology-related industries it rose 62.6 percent.
Despite the drop in overseas investment, China remains one of the most attractive destinations for foreign capital due to its relatively stable growth and improving environment for investors, according to a recent KPMG survey.
Multinational companies are still keen to invest in China, especially in the manufacturing and retailing industries, as the country's 7 to 8 percent economic annual growth would lead to a large and growing source of revenue, survey participants said.
Capital from the 27-member European Union increased 1.6 percent year on year to US$3.52 billion in the first six months, bolstered by more funds from Switzerland, the Netherlands and Germany, ministry data showed.
Japanese investors raised their investments by 16.9 percent to US$4.1 billion during the January-June period but capital from the United States fell 3.2 percent to US$1.63 billion.
China's outbound non-financial foreign direct investment climbed 48.2 percent to US$35.4 billion in the first six months, a dramatic increase over last year's 1.8 percent.
China became the world's sixth biggest international investor in 2011 with about 200 deals conducted.
Xu Sitao, global forecasting director for China at the Economist Intelligence Unit, said the world was set to see more investment from China by both state-owned enterprises and private companies, and in more industries than energy.
In the first half, Chinese investors raised their overseas investment in commercial services by 183 percent, in cultural and sports by 150 percent, in entertainment by 53 percent, in real estate by 46.8 percent, and in technological research by 45 percent, the ministry data showed.
It fell 6.9 percent from a year earlier to US$12 billion last month, the Ministry of Commerce said yesterday.
The decline followed an increase of 0.05 percent in May.
Shen Danyang, a ministry spokesman, said stagnant economic growth around the world, and especially the lack of a proper solution to the eurozone debt crisis, was continuing to dissuade investors.
According to a recent United Nations survey, multinational companies reported a record high level of cash holdings, but expressed little willingness to invest in the near future.
Shen added that "the weakening conditions in the domestic market also weigh on China's strength in absorbing foreign capital, when production costs are rising rapidly and the supply of land is shrinking."
In the first half, foreign investors set up a total of 11,705 new enterprises in China with an investment of US$59.1 billion, a contraction of 3 percent compared to a year earlier.
Of that, foreign investment in the property sector slumped 12.4 percent, the sharpest in all categories, ministry data showed.
In comparison, foreign investment in the finance industry jumped 73.3 percent annually in the first six months, and in information technology-related industries it rose 62.6 percent.
Despite the drop in overseas investment, China remains one of the most attractive destinations for foreign capital due to its relatively stable growth and improving environment for investors, according to a recent KPMG survey.
Multinational companies are still keen to invest in China, especially in the manufacturing and retailing industries, as the country's 7 to 8 percent economic annual growth would lead to a large and growing source of revenue, survey participants said.
Capital from the 27-member European Union increased 1.6 percent year on year to US$3.52 billion in the first six months, bolstered by more funds from Switzerland, the Netherlands and Germany, ministry data showed.
Japanese investors raised their investments by 16.9 percent to US$4.1 billion during the January-June period but capital from the United States fell 3.2 percent to US$1.63 billion.
China's outbound non-financial foreign direct investment climbed 48.2 percent to US$35.4 billion in the first six months, a dramatic increase over last year's 1.8 percent.
China became the world's sixth biggest international investor in 2011 with about 200 deals conducted.
Xu Sitao, global forecasting director for China at the Economist Intelligence Unit, said the world was set to see more investment from China by both state-owned enterprises and private companies, and in more industries than energy.
In the first half, Chinese investors raised their overseas investment in commercial services by 183 percent, in cultural and sports by 150 percent, in entertainment by 53 percent, in real estate by 46.8 percent, and in technological research by 45 percent, the ministry data showed.
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