Inbound investment was $7.2 billion in August, down 14 percent from a year earlier, the Ministry of Commerce said in Beijing after a 17 percent drop in July. It was the first back-to-back decline of more than 10 percent since 2009, based on previously reported data compiled by Bloomberg.

U.S. Treasury Secretary Jacob J. Lew said in a missive to Vice Premier Wang Yang that China is using competition law to force companies to cut prices its consumers pay for products relying on foreign intellectual property, according to a person with knowledge of the correspondence. Lew said such steps might have consequences for bilateral ties, according to the person, who asked not to be identified because the letter isn’t public.

“I don’t know where this is going in the future, but it will not go in a direction that’s favorable for foreign investment,” said Niu Jun, professor at Peking University’s School of International Studies in Beijing. “The impact on Sino-U.S. relations will be significant. If this spreads into the economic realm, or a campaign like that seen against Japanese goods, it is hard to say what will happen.”

‘No Relation’

The July and August declines in FDI have “no relation” to China’s anti-monopoly measures, Shen Danyang, a Commerce Ministry spokesman, said at a briefing in Beijing without elaborating, according to a transcript on the ministry’s website. China can still attract $120 billion in inbound investment in 2014, he said at a separate briefing.

Lew’s complaint follows criticism from the main U.S. and European business lobbies in China that authorities in the world’s second-biggest economy are discriminating against non- Chinese corporations. Dozens of foreign companies are being targeted in probes, with regulators opening an anti-monopoly investigation into Microsoft Corp. in July and state media accusing Apple Inc. of using its iPhone to steal state secrets.

With Chinese economic growth in danger of missing Premier Li Keqiang’s target of about 7.5 percent this year, the regulatory flap and investment downturn pose an additional headwind. The FDI drop follows data released Sept. 13 that showed the weakest industrial-output expansion since the global financial crisis and moderating investment and retail sales growth.

Stocks Drop

The benchmark Shanghai Composite Index slumped 1.8 percent, its biggest drop since March. One-year interest-rate swaps dropped to the lowest level since June and the yuan fell to result in its steepest three-day decline since that month.

Economists at banks including Royal Bank of Scotland Group Plc cut their 2014 expansion forecasts after the weekend data and said they anticipate the government will step up the rollout of measures to support the economy.

China’s use of economic-growth targets, along with incentives that encourage exceeding them, are weakening the nation’s financial stability, Standard & Poor’s said.

Rising debt to support expansion “has moved China to a position where the fragility of its financial sector is seen as the biggest macro risk to the country, if not the global economy,” Paul Gruenwald, S&P’s chief Asia-Pacific economist, said in a statement tied to a report.

Less Welcome

American Chamber of Commerce in China members also cited concerns about China’s long-term economic health and its reliance on investment and exports amid rising debt and lower consumption growth, Greg Gilligan, the group’s chairman, said in a report this month. Sixty percent of respondents to a survey last month said they feel foreign business is less welcome in the country than before, the group said Sept. 2.

Chinese officials have sought to defend their actions, with a rare joint press briefing last week of the country’s three antitrust regulators highlighting that only about 10 percent of anti-monopoly investigations have involved foreign businesses. In remarks to an audience including executives of overseas companies, Li last week pledged to improve conditions for attractive foreign investment.

China’s anti-monopoly measures are transparent, fair and done in accordance with the law, Qin Gang, a Foreign Ministry spokesman, said at a briefing in Beijing on Sept. 2.

Volkswagen AG’s Audi, Bayerische Motoren Werke AG, Daimler AG’s Mercedes-Benz, Tata Motors Ltd.’s Jaguar Land Rover, Fiat SpA’s Chrysler, Toyota Motor Corp. and Honda Motor Co. have all announced price cuts of vehicles or spare parts since July in the wake of probes.

GM, SAIC

General Motors Co. said last month that its joint venture with SAIC Motor Corp. has been responding to regulator requests since 2012.

Authorities raided the offices of software maker Microsoft in July, while Qualcomm Inc. and Mead Johnson Nutrition Co. have also fallen under anti-monopoly scrutiny in China.

In the first eight months of 2014, China’s inbound FDI fell 1.8 percent from a year ago to $78.3 billion, the ministry said. By contrast, outbound investment by Chinese companies over that period has climbed 15.3 percent to $65.2 billion.

Outbound investment will maintain rapid growth and exceed inflows in 2015, the Commerce Ministry’s Shen said.