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Another slump in foreign investment
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DIRECT foreign investment in China plummeted again last month, but not because of the ongoing anti-monopoly investigations, according to the Ministry of Commerce, which said the fall had narrowed compared with July.
Foreign investors channeled US$7.2 billion of funds into China in August, the lowest amount for at least two and a half years and 14 percent down from a year earlier. July saw a 16.9 percent decrease compared with the same month in 2013 while foreign investment in June rose by 0.2 percent.
“The decline was not associated with the anti-monopoly investigation,” ministry spokesman Shen Danyang said at a news briefing yesterday.
Last month, he said it was normal for foreign investment to fluctuate from month to month because of its highly unpredictable nature and against the background of China’s strengthened industrial restructuring efforts.
China’s anti-monopoly investigations were launched in late July and involved multinational companies that included Mercedes-Benz, Microsoft and Qualcomm.
But the investigations were not targeted at foreign companies, Shen said yesterday, and “well-behaved firms need not at all worry about those routine inquiries.”
Xue Jun, an analyst at CITIC Securities Co, said: “China has shown increasing signs of an economic slowdown, and that may be a reason for less arrivals of foreign investment, and add pressure on capital outflow.”
According to data from the central bank, China’s funds outstanding for foreign exchange fell unexpectedly in August, reversing the increase seen in July and pointing at a capital outflow tendency.
China’s economic recovery has stalled in recent months as major activity data, including industrial production, fixed-asset investment and retail sales, all expanded at a slower pace in July and August.
Industrial production growth even moderated to its weakest in five years last month, triggering fears over whether China can fulfill its growth target of 7.5 percent for the year.
Zhou Hao, an analyst at Australia & New Zealand Banking Group Ltd, urged more supportive policies.
In the first eight months, foreign direct investment has edged down 1.8 percent to US$78.3 billion with 15,200 new overseas ventures being established on the Chinese mainland.
Investment from Japan dropped 43.3 percent during the January-August period, while investors from the United States, the European Union and the ASEAN countries reduced their investment by 16.9 percent, 17. 9 percent and 9.7 percent, respectively, according to the ministry.
However, as a sign of China’s growing efforts to restructure the economy, foreign investment flowing into China’s services sector gained 8.9 percent to US$43.3 billion in the first eight months, or 55 percent of the total.
In comparison, the manufacturing sector drew US$27.5 billion, down 15.7 percent on an annual basis, to account for 35 percent of the basket.
Meanwhile, China’s outbound direct investment grew 15.3 percent to US$65.1 billion in the first eight months, with investment in August more than double that of a year earlier.
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