Tags: Growth | Foreign | Investment | China | Slows

Foreign Investment in China Grows at Slower Pace

Friday, 15 Jul 2011 07:42 AM

Foreign direct investment (FDI) in China grew at a slower pace in the first half of 2011, weighed down by falling inflows from the United States that reflected its fragile recovery, the commerce ministry said on Friday.

China attracted $60.9 billion in FDI in the first six months, up 18.4 percent from a year earlier, the ministry said. That marked a slowdown from a 23.4 percent rise in the first five months and an increase of 26 percent in the first four months.

Investment by U.S. firms fell 22.3 percent in the first half of 2011 from a year ago, according to the ministry. FDI inflows from the United States dropped 24.1 percent in the first five months, following a 28 percent dip in the January-April period.

But ministry spokesman Yao Jian said the tepid FDI from the developed countries was a "temporary phenomenon", predicting China's overall FDI would keep rising in the coming years.

"I think it is quite normal to see a drop in the U.S. direct investment in China, if you take into account of a slowdown in the overall U.S. outbound investment in the bigger context of the current world economic environment," Yao told a conference.

"I am confident that China is still one of the most attractive investment destination in the world," he added.

FDI from the European Union also slowed as the region struggles to cope with a debt crisis, with investment rising only 1.2 percent in the first six months from a year earlier.

Data also shows that investment from Asian countries kept surging in the first half, with FDI inflows from the top 10 countries in the fast-growing region rising 23.9 percent from a year ago.

China's service sector continued to attract more foreign funds than other sectors in the first half, with investment jumping 21.4 percent from a year earlier, outpacing a 15.6 percent rise in the manufacturing industry.

Foreign investment inflows in the services sector accounted for 46.1 percent of the total investment in the first half, compared with 43.5 percent for the manufacturing industry.

In June alone, China attracted $12.9 billion in FDI, up 2.8 percent from a year ago, the ministry said.

Investment inflows, which surged in the years after China joined the World Trade Organisation in 2001, have recovered strongly after being hit hard by the global economic slowdown.

The ministry sounded a cautious tone on the export outlook.

"In the second half, our export growth will face pressures from the rising costs and weak external demand, and the environment at both home and abroad are still complicated and severe," the ministry said in a statement.

Yao said the government would maintain the "consistency and stability" of export policies this year and take measures to improve its export structure.

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Foreign direct investment (FDI) in China grew at a slower pacein the first half of 2011, weighed down by falling inflows from the United States that reflected its fragile recovery, the commerce ministry said on Friday. China attracted $60.9 billion in FDI in the first six...
Growth,Foreign,Investment,China,Slows
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2011-42-15
Friday, 15 Jul 2011 07:42 AM
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