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Fifth straight FDI fall amid EU woes

Fifth straight FDI fall amid EU woes

Updated: 2012-04-18 03:24

By Ding Qingfen in Beijing and Chen Limin in Hong Kong (China Daily)

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Investment focus to highlight western and central regions

Foreign direct investment fell for a fifth straight month in March as the European debt crisis worsened and the world's second-largest economy registered weaker growth.

The Ministry of Commerce said the FDI outlook remains "grim" in the coming months. However, measures will be taken to "stabilize" FDI by encouraging foreign companies to invest in central and western regions.

China's inbound investment last month dropped 6.1 percent, from a year earlier, to $11.76 billion, the ministry said on Tuesday.

The February figure was a 0.9 percent drop.

"Foreign companies invest less in a sluggish global economy," Shen Danyang, the ministry spokesman, said.

"Tightening policies on the property market also led to a decrease in foreign investment," he said.

Real estate makes up about 25 percent of FDI and foreign investment from the sector dropped by 6.3 percent year-on-year, in the first quarter.

The corresponding period last year saw a gain of 38.6 percent.

Investment from the European Union, grappling with a major sovereign debt crisis, tumbled 31.2 percent in the first quarter, from a year earlier, to $1.41 billion. Europe is a key trading partner and its economic troubles have had consequences for China as witnessed by the Friday announcement that the economy grew at the slowest pace in almost three years.

However, Tuesday's figures showed capital flow from the United States rose 10.1 percent, in the first quarter, to reach $893 million. This reversed a falling trend over the last few months as the world's largest economy shows signs of recovery.

Analysts said better Sino-Thai ties will not only benefit the two countries, but also Southeast Asia.

Zhou Fangye, an expert on Thai studies at the Chinese Academy of Social Sciences, said it's no surprise that the two countries elevated ties to the comprehensive partnership as they have cooperated in a number of areas.

Zhang Xuegang, an expert on Southeast Asian studies with the China Institutes of Contemporary International Relations, said Yingluck's visit will boost ties and help prevent the ties being affected by changes in Thailand's political situation.

Zhang said the joint patrol on the Mekong River also needs to be expanded and include more countries, such as Cambodia.

Heading a 50-strong business delegation, Yingluck will meet Chinese and Thai businessmen on Wednesday.

She is due to meet President Hu Jintao on Wednesday.

She is also scheduled to visit China's flood control and drought relief headquarters on Thursday before heading to the port city of Tianjin.

China is Thailand's largest export market and second-largest source of imports.

Chinese statistics show that trade hit $64.7 billion in 2011.