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FDI grows faster in October amid hot money concern
By Wang Yanlin |
November 16, 2010, Tuesday
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Online Edition
Online Edition
FOREIGN direct investment in China expanded faster in October from September, but analysts said that it might have been largely boosted by speculative funds.
October's foreign investment grew 7.86 percent from a year earlier to US$7.66 billion, maintaining a gaining streak for 15 months in a row, the Ministry of Commerce said today.
The pace picked up from the increase of 6.14 percent in September and 1.38 percent in August. But it fell short of July's jump of 29.1 percent and June's 39.6 percent.
"The continuing rebound shows foreign investors' confidence in China's economy as a whole," said Li Maoyu, an analyst at the Changjiang Securities Co.
China's gross domestic product expanded 10.6 percent from a year earlier to 26.8 trillion yuan (US$4 trillion) in the first three quarters, securing the position of the world's second-largest economy after it surpassed Japan in the first half.
However, concerns over the inflow of speculative funds, or hot money, still prevailed.
The State Administration of Foreign Exchange, China's currency regulator, said last week that it will tighten control over the auditing of overseas fundraising and demand banks to hold more foreign exchange to tackle the inflow of hot money.
It will also strictly manage banks' short-term foreign debt quota and introduce new rules on covering their exposure to currency risk.
Such fear for floods of hot money was stoked up after the United States said it will take another round of easing monetary policy, which may push liquidity into emerging markets for quick return on a stronger yuan.
China will restrict hot money inflows disguised as foreign direct investment, commerce ministry spokesman Yao Jian said today at a media briefing in Beijing.
October's foreign investment grew 7.86 percent from a year earlier to US$7.66 billion, maintaining a gaining streak for 15 months in a row, the Ministry of Commerce said today.
The pace picked up from the increase of 6.14 percent in September and 1.38 percent in August. But it fell short of July's jump of 29.1 percent and June's 39.6 percent.
"The continuing rebound shows foreign investors' confidence in China's economy as a whole," said Li Maoyu, an analyst at the Changjiang Securities Co.
China's gross domestic product expanded 10.6 percent from a year earlier to 26.8 trillion yuan (US$4 trillion) in the first three quarters, securing the position of the world's second-largest economy after it surpassed Japan in the first half.
However, concerns over the inflow of speculative funds, or hot money, still prevailed.
The State Administration of Foreign Exchange, China's currency regulator, said last week that it will tighten control over the auditing of overseas fundraising and demand banks to hold more foreign exchange to tackle the inflow of hot money.
It will also strictly manage banks' short-term foreign debt quota and introduce new rules on covering their exposure to currency risk.
Such fear for floods of hot money was stoked up after the United States said it will take another round of easing monetary policy, which may push liquidity into emerging markets for quick return on a stronger yuan.
China will restrict hot money inflows disguised as foreign direct investment, commerce ministry spokesman Yao Jian said today at a media briefing in Beijing.
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