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Slowdown in FDI attributed to high comparative base
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China’s foreign direct investment growth slowed sharply in August, the Ministry of Commerce said yesterday, attributing the slowdown to a high comparative base last year.
Inbound foreign direct investment expanded 0.62 percent from a year earlier to US$8.37 billion last month, moderating from the jump of 24.1 percent in July.
China attracted US$8.36 billion of foreign investment in August last year, US$780 million more than the previous month.
“China’s foreign investment has maintained a positive growth for a seventh straight month by August, indicating global investors’ confidence in China’s economy,” ministry spokesman Shen Danyang said.
“Against the background of international economic slowdown, it is no easy job for China to sustain such a growth momentum,” Shen said.
He expected China to attract more foreign investment this year than last year’s US$111.7 billion, with stable growth over the next four months.
Foreign direct investment stood at US$79.7 billion in the January-August period, up 6.37 percent on an annual basis, official data showed.
Li Maoyu, an analyst at CITIC Securities Co, said the taper of American ultra loose policies may be another factor in the slowdown. “Capital flight has become an issue in some emerging markets, and the sudden slowdown of China’s foreign investment last month may also relate to this,” Li said.
On several occasions, Chinese leaders have urged the United States to be responsible in ending quantitative easing policies to avoid hurting smaller economies.
In the first eight months, investment from the 27-member European Union rose 24.2 percent to US$5.4 billion, while capital from American firms jumped 18 percent to US$2.5 billion.
Meanwhile, China’s outbound direct investment surged 18.5 percent to US$56.5 billion during the January-August period, indicating Chinese investors’ strong enthusiasm to globalize their businesses.
China became the world’s third-largest investor for the first time last year, with its outbound investment increasing 17.6 percent annually to US$87.8 billion while world investors reduced their investment by 17 percent, according to a recent ministry document.
Commerce, finance, refinery, retail, wholesale, manufacturing, logistics and construction were the industries attracting the most of Chinas’s outbound investment, the document said.
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