FDI in China up five months in row
By Wang Yanlin |
January 16, 2010, Saturday
|
Print Edition
Print Edition
Foreign direct investment in China more than doubled in December compared with a year earlier, rising for the fifth straight month after a period of decline.
China's FDI surged 103 percent from a year earlier to US$12.1 billion last month, bettering an increase of 32 percent in November, the Ministry of Commerce said yesterday.
It wrapped up foreign investment in 2009 at US$90 billion, down 2.6 percent on an annual basis because of sharp falls at the beginning of last year in the midst of the global economic downturn.
"The climb in foreign investment last month showed people's growing confidence in China's economy," said Li Maoyu, an analyst at Changjiang Securities Co.
"China has become a spotlight in global markets, as it is on track to become number one in many aspects ... For investors, China is a safe bet and probably the best bet."
China overtook Germany as the world's largest exporter in December. China also became the world's largest auto market last year. Looking into the future, China may replace the United States as the world's biggest consumer market by 2020, according to a forecast by the world's leading financial services group Credit Suisse.
The country's gross domestic product may conceivably show double-digit growth in the fourth quarter of 2009, improving on the gain of 8.9 percent in the third quarter.
"The great potential, as well as the relatively stable economic and social order, makes China an alluring destination for investment," Li said.
But he stressed that the government needs to guard against the comeback of speculative funds.
"China has asked banks to raise the reserve requirement ratio to mop up liquidity. The move will fuel speculation of imminent increases in interest rates," the analyst said.
"Also, the rebound in exports will re-trigger calls for China to appreciate its currency. Both will draw in hot money," Li said.
Chinese banks were ordered to put aside more money with the central bank, beginning on Monday. The surprise move was considered a harbinger of tightening policies.
Yao Jian, spokesman of the Ministry of Commerce, said China's manufacturing sector attracted the biggest thrust of foreign investment in 2009, while funds going to the service industry expanded quickly compared with a year earlier.
Mergers and acquisitions became a major form of non-financial investment. The value of M&As involving foreign funds reached US$17.5 billion, accounting for 40.4 percent of non-financial foreign investment.
Shanghai attracted a total of US$10.5 billion in investment from overseas investors, up 4.5 percent from a year earlier. It was the second straight year for the city to achieve FDI exceeding US$10 billion.
Shanghai has made various efforts to boost foreign investment, as the city considers it vital to upgrade its economic structure.
China's FDI surged 103 percent from a year earlier to US$12.1 billion last month, bettering an increase of 32 percent in November, the Ministry of Commerce said yesterday.
It wrapped up foreign investment in 2009 at US$90 billion, down 2.6 percent on an annual basis because of sharp falls at the beginning of last year in the midst of the global economic downturn.
"The climb in foreign investment last month showed people's growing confidence in China's economy," said Li Maoyu, an analyst at Changjiang Securities Co.
"China has become a spotlight in global markets, as it is on track to become number one in many aspects ... For investors, China is a safe bet and probably the best bet."
China overtook Germany as the world's largest exporter in December. China also became the world's largest auto market last year. Looking into the future, China may replace the United States as the world's biggest consumer market by 2020, according to a forecast by the world's leading financial services group Credit Suisse.
The country's gross domestic product may conceivably show double-digit growth in the fourth quarter of 2009, improving on the gain of 8.9 percent in the third quarter.
"The great potential, as well as the relatively stable economic and social order, makes China an alluring destination for investment," Li said.
But he stressed that the government needs to guard against the comeback of speculative funds.
"China has asked banks to raise the reserve requirement ratio to mop up liquidity. The move will fuel speculation of imminent increases in interest rates," the analyst said.
"Also, the rebound in exports will re-trigger calls for China to appreciate its currency. Both will draw in hot money," Li said.
Chinese banks were ordered to put aside more money with the central bank, beginning on Monday. The surprise move was considered a harbinger of tightening policies.
Yao Jian, spokesman of the Ministry of Commerce, said China's manufacturing sector attracted the biggest thrust of foreign investment in 2009, while funds going to the service industry expanded quickly compared with a year earlier.
Mergers and acquisitions became a major form of non-financial investment. The value of M&As involving foreign funds reached US$17.5 billion, accounting for 40.4 percent of non-financial foreign investment.
Shanghai attracted a total of US$10.5 billion in investment from overseas investors, up 4.5 percent from a year earlier. It was the second straight year for the city to achieve FDI exceeding US$10 billion.
Shanghai has made various efforts to boost foreign investment, as the city considers it vital to upgrade its economic structure.
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