Chinese foreign investment surges despite slowdown

By Ding Qingfen (China Daily)
Updated: 2010-07-16 11:06
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Beijing - China's foreign direct investment (FDI) swelled to $13 billion for the month of June - an increase of nearly 40 percent over the same period last year.

The surge, the highest single increase since December 2007, according to industry analysts, reflects how China's investment climate remains highly attractive in the long-term, despite an economic slowdown.

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This robust FDI growth is also a powerful rebuke to rising concerns among foreign businesses that China's investment environment is worsening, and thus losing ground to its neighbors elsewhere in Asia.

On Thursday, Ministry of Commerce officials announced that China's FDI in non-financial sectors grew by 39.6 percent in June to $12.51 billion, the 11th consecutive month of growth since last August. This investment volume, moreover, is now at its largest since any point at the end of 2007, while its growth rate is at its fastest since the end of 2009.

"These factors indicate global investors' confidence has resumed rapidly," said Liu Yajun, director of Department of Foreign Investment Administration with the Ministry of Commerce.

Given Beijing's policies and the mainland's overall economic prospects, Liu added, "China is becoming more and more appealing" to foreigners.

Also on Thursday, the government released national economic figures for the first half of the fiscal year, showing China's economic expansion eased to 10.3 percent in the second quarter.

Ministry of Commerce officials similarly insisted that the slowdown in GDP growth would not dampen the global investor confidence in China in the months ahead.

Even if the global economic recovery remains stable and the European debt crisis does not deteriorate, added Liu, "China will herald fairly strong growth in FDI in the second half of 2010."

John G. Rice, vice-chairman of General Electric (GE), one of the world's leading industrial and technology companies, said on Thursday that weakening growth in China will not "dampen the company's enthusiasm in its economy and the market".

This is echoed by worldwide assessments of China's economy. "There is no surprise that the growth of FDI is significant," Rice said, "as there are many that bet the same way as we believe."

Last week, most notably, the International Monetary Fund (IMF) raised China's growth forecast for 2010 to 10.5 percent - three times that of the US.

During the first half, the service sector clearly outperformed other parts of the economy in absorbing the FDI. The Ministry of Commerce that said this accounted for 44.9 percent of the total volume.

The western region, meanwhile, has witnessed a rapid increase in foreign investment, although this volume remains smaller compared with other parts of the country. From January to June, for example, new investment in western provinces grew by 31 percent.

Li Xiang, Yang Ning and Lan Lan contributed to this story.