Foreign investment hits 2-year low
By Wang Yanlin |
August 17, 2012, Friday
|
Print Edition
Print Edition
FOREIGN direct investment in China fell 8.7 percent from a year earlier to hit a two-year low in July, extending the deceleration a second month amid the country's slowing economic growth.
July's inbound foreign direct investment was US$7.58 billion, compared with US$12 billion a month earlier, the Ministry of Commerce said yesterday.
The decline followed the cut of 6.9 percent in June and a short-lived increase of 0.05 percent in May, compared with the same months last year.
In the first seven months, foreign investors set up altogether 13,677 new enterprises in China with an investment of US$66.7 billion, which contracted 3.6 percent from a year earlier.
"Unstable economic conditions overseas, especially the lack of a proper solution to the eurozone debt crisis, continue to keep investors nervous about new investment," said Shen Danyang, a spokesman at the ministry.
"Also, the rise of other emerging markets, such as India, Brazil and Russia, diversified the destinations of foreign investment," Shen added.
On the part of the domestic side, rising labor costs, less supply of land and weak consumption demand in recent months were also factors that caused less foreign investment.
However, Shen insisted China's strength in attracting foreign investment "would exist a long time" because of China's stable political conditions, more mature legal system and better investment environment.
A recent KPMG survey showed China remains one of the most attractive destinations for foreign capital due to its relatively stable growth and an improving environment for investors.
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 growth annually will create a large and growing source of revenue for them, the survey participants said.
A survey by the American Chamber of Commerce in China showed 76 percent of US firms in China expected better operational revenues this year compared with last year, indicating their confidence in the Chinese market.
Shanghai again defies trend
During the January-July period, foreign investment in China's manufacturing sector fell 6.4 percent year on year to US$30.1 billion. Investment flowing into China's service sector dropped 3.2 percent to US$30.7 billion, led by a 9.3-percent cut of foreign investment in China's property market, the ministry said.
Investors from the United States placed US$1.96 billion to develop business in China in the first seven months, up 1 percent from a year earlier. Capital from the 27-member European Union fell 2.7 percent to US$3.97 billion.
However, Shanghai's inbound foreign direct investment managed to defy the national trend of shrinkage again in July by expanding 9.9 percent to US$1.66 billion, the Shanghai Statistics Bureau said yesterday.
The mature market system, skilled workforce, efficient government, transparent laws as well as quality projects like the Disneyland park being built are major reasons for foreign investors to favor the city when uncertainties around the world made them extremely cautious, analysts said.
Meanwhile, China's outbound non-financial foreign direct investment climbed 52.8 percent to US$42.2 billion in the first seven months, up dramatically from last year's growth of 1.8 percent. Spokesman Shen said China's outbound investment has flowed rapidly into the commercial service sector, which accounted for 56.8 percent of the total amount and replaced mining as the biggest destination industry for Chinese investments.
July's inbound foreign direct investment was US$7.58 billion, compared with US$12 billion a month earlier, the Ministry of Commerce said yesterday.
The decline followed the cut of 6.9 percent in June and a short-lived increase of 0.05 percent in May, compared with the same months last year.
In the first seven months, foreign investors set up altogether 13,677 new enterprises in China with an investment of US$66.7 billion, which contracted 3.6 percent from a year earlier.
"Unstable economic conditions overseas, especially the lack of a proper solution to the eurozone debt crisis, continue to keep investors nervous about new investment," said Shen Danyang, a spokesman at the ministry.
"Also, the rise of other emerging markets, such as India, Brazil and Russia, diversified the destinations of foreign investment," Shen added.
On the part of the domestic side, rising labor costs, less supply of land and weak consumption demand in recent months were also factors that caused less foreign investment.
However, Shen insisted China's strength in attracting foreign investment "would exist a long time" because of China's stable political conditions, more mature legal system and better investment environment.
A recent KPMG survey showed China remains one of the most attractive destinations for foreign capital due to its relatively stable growth and an improving environment for investors.
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 growth annually will create a large and growing source of revenue for them, the survey participants said.
A survey by the American Chamber of Commerce in China showed 76 percent of US firms in China expected better operational revenues this year compared with last year, indicating their confidence in the Chinese market.
Shanghai again defies trend
During the January-July period, foreign investment in China's manufacturing sector fell 6.4 percent year on year to US$30.1 billion. Investment flowing into China's service sector dropped 3.2 percent to US$30.7 billion, led by a 9.3-percent cut of foreign investment in China's property market, the ministry said.
Investors from the United States placed US$1.96 billion to develop business in China in the first seven months, up 1 percent from a year earlier. Capital from the 27-member European Union fell 2.7 percent to US$3.97 billion.
However, Shanghai's inbound foreign direct investment managed to defy the national trend of shrinkage again in July by expanding 9.9 percent to US$1.66 billion, the Shanghai Statistics Bureau said yesterday.
The mature market system, skilled workforce, efficient government, transparent laws as well as quality projects like the Disneyland park being built are major reasons for foreign investors to favor the city when uncertainties around the world made them extremely cautious, analysts said.
Meanwhile, China's outbound non-financial foreign direct investment climbed 52.8 percent to US$42.2 billion in the first seven months, up dramatically from last year's growth of 1.8 percent. Spokesman Shen said China's outbound investment has flowed rapidly into the commercial service sector, which accounted for 56.8 percent of the total amount and replaced mining as the biggest destination industry for Chinese investments.
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