Foreign investment falls in China for 4th month
By Wang Yanlin |
March 16, 2012, Friday
|
Print Edition
Print Edition
Foreign direct investment in China fell for the fourth straight month in February as European investors continued to curb spending amid their prolonged debt crisis.
In comparison, capital from Asia and the United States picked up.
Foreign investors channeled a total of US$7.73 billion to China last month, the value of which declined 0.9 percent from a year earlier, the Ministry of Commerce said yesterday.
The pace in February weakened from a reduction of 0.3 percent in January, but was better than December's 12.7 percent cut.
The 27-member European Union placed US$906 million in China in the first two months - a drop of 33.3 percent from a year earlier.
"Less foreign investment is expected because companies are reining in spending amid so many uncertainties," said Xue Jun, an analyst at CITIC Securities Co. "The downward trend will continue if Europe can't end its economic woes."
But input from American investors still rose 0.87 percent to US$525 million between January and February, while investment from 10 Asian countries and regions, including Japan, South Korea, the Philippines, Thailand and Malaysia, jumped an annualized 2.66 percent to US$15.3 billion, or a majority of China's US$17.7 billion FDI in the first two months.
"Apart from caring about the volume of foreign investments, we should pay more attention to their quality, making it in line with our growth target set up for the 12th Five-Year Plan," Xue said.
China has lowered its economic growth target to 7.5 percent this year from the 8 percent in place since 2005, aiming at a more balanced and healthier growth pattern.
Foreign investment in China's manufacturing sector lost 0.1 percent from a year earlier to US$8.3 billion between January and February, while that in the service industry fell 3.5 percent to US$8 billion.
Meanwhile, China's outbound non-financial foreign direct investment surged 41.1 percent year on year to US$7.4 billion in the first two months, up dramatically from last year's 1.8 percent growth.
Shen Danyang, a ministry spokesman, said the growth was largely driven by more overseas investment from private firms.
Xu Sitao, an economist at the Economist Intelligence Unit, said China needs to accelerate domestic reform in finance and other areas to make it easier for Chinese companies investing overseas.
"Chinese companies, especially state-owned enterprises, are perceived as gaining unfair advantages from the government in many foreign countries. We need to change that perspective," Xu said.
Shen said China's US$31.5 billion trade deficit in February, the biggest in a decade, was mainly due to seasonal changes. "China will still report a trade surplus this year. But the amount of surplus will continue to weigh down in the total economic output."
Shen reiterated China's stance on curbing exports of rare earth, saying it was motivated by environmental concerns and China will try to settle disputes under the World Trade Organization mechanism. "The ministry will offer a variety of public services, such as risk precaution and information consultation, to help companies cope with trade conflicts," Shen said.
In comparison, capital from Asia and the United States picked up.
Foreign investors channeled a total of US$7.73 billion to China last month, the value of which declined 0.9 percent from a year earlier, the Ministry of Commerce said yesterday.
The pace in February weakened from a reduction of 0.3 percent in January, but was better than December's 12.7 percent cut.
The 27-member European Union placed US$906 million in China in the first two months - a drop of 33.3 percent from a year earlier.
"Less foreign investment is expected because companies are reining in spending amid so many uncertainties," said Xue Jun, an analyst at CITIC Securities Co. "The downward trend will continue if Europe can't end its economic woes."
But input from American investors still rose 0.87 percent to US$525 million between January and February, while investment from 10 Asian countries and regions, including Japan, South Korea, the Philippines, Thailand and Malaysia, jumped an annualized 2.66 percent to US$15.3 billion, or a majority of China's US$17.7 billion FDI in the first two months.
"Apart from caring about the volume of foreign investments, we should pay more attention to their quality, making it in line with our growth target set up for the 12th Five-Year Plan," Xue said.
China has lowered its economic growth target to 7.5 percent this year from the 8 percent in place since 2005, aiming at a more balanced and healthier growth pattern.
Foreign investment in China's manufacturing sector lost 0.1 percent from a year earlier to US$8.3 billion between January and February, while that in the service industry fell 3.5 percent to US$8 billion.
Meanwhile, China's outbound non-financial foreign direct investment surged 41.1 percent year on year to US$7.4 billion in the first two months, up dramatically from last year's 1.8 percent growth.
Shen Danyang, a ministry spokesman, said the growth was largely driven by more overseas investment from private firms.
Xu Sitao, an economist at the Economist Intelligence Unit, said China needs to accelerate domestic reform in finance and other areas to make it easier for Chinese companies investing overseas.
"Chinese companies, especially state-owned enterprises, are perceived as gaining unfair advantages from the government in many foreign countries. We need to change that perspective," Xu said.
Shen said China's US$31.5 billion trade deficit in February, the biggest in a decade, was mainly due to seasonal changes. "China will still report a trade surplus this year. But the amount of surplus will continue to weigh down in the total economic output."
Shen reiterated China's stance on curbing exports of rare earth, saying it was motivated by environmental concerns and China will try to settle disputes under the World Trade Organization mechanism. "The ministry will offer a variety of public services, such as risk precaution and information consultation, to help companies cope with trade conflicts," Shen said.
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