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Expectation of actual FDI lowered
( 2003-12-05 10:30) (China Daily HK Edition)

The mainland has lowered its expectation of actual foreign direct investment (FDI) this year, according to Fu Ziying, assistant minister of commerce.

He told a business conference in Beijing that "annual FDI can reach US$50 billion", lower than the US$52.7 billion last year.

Ministry officials said in September the figure would rise to about US$57 billion this year.

The adjustment was made following a slowdown in FDI in recent months; actual FDI has dropped for five consecutive months since June.

Actual FDI was US$43.56 billion in the January-October period, a rise of 5.81 per cent from a year earlier.

Many analysts agree that the slowdown was caused by the deadly severe acute respiratory syndrome (SARS) outbreak earlier this year.

But Jin Bosheng, director of the foreign investment research department of the Chinese Academy of International Trade and Economic Co-operation, said SARS was not the only factor; and there could be other reasons behind it.

A government tightening of FDI inflows is possible to decrease pressure to revalue the renminbi, he said, adding that he believes the FDI figure will be about the same as last year.

Jin is confident the actual FDI would rebound strongly early next year given the huge growth in contractual FDI.

Contracted foreign investment, an indicator of future trends, rose 33.75 per cent year on year in the first 10 months to US$88.68 billion.

Vice-Minister of Commerce Liao Xiaoqi said last month that foreign investment would remain robust, despite the fact that actual FDI experienced a two-digit decrease for four straight months from July to October.

"There is no reason for FDI to suffer a big drop in the future since China offers so many opportunities," said Liao.

Jin, agreeing with Liao, said China would continue to be a hot destination for FDI since there have been no drastic changes in its favorable macro-situation.

Fu also told the conference that China's foreign trade would reach US$800 billion this year; with the surplus likely to be less than half the US$30.4 billion last year, as growth in imports outpaces export growth, he said.

In the January-October period, exports rose 32.8 per cent year-on-year while imports were up 40.4 per cent.

"Growth in China's total trade will be only 8 per cent in 2004, down sharply from the 36.4 per cent growth in the first 10 months of this year compared with a year earlier," he said.

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