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EU investment in China shrinks in 2007

(Xinhua)
Updated: 2008-05-20 09:30

European Union (EU) investment in China shrank in 2007 despite a strong growth of the 27-nation bloc's cash flow into foreign companies, official figures showed on Monday.

Foreign direct investment (FDI) from the EU into China, excluding Hong Kong Special Administrative Region, dropped sharply from six billion euros ($9.3 billion) in 2006 to 1.8 billion euros last year, according to Eurostat, the EU's statistics bureau.

It was quite a small amount if compared with the total foreign investment by the EU. In 2007, EU FDI outflows rose by 53 percent from 275 billion euros in 2006 to 420 billion euros in 2007.

Meanwhile, Chinese investment in the EU also decreased significantly from 2.2 billion euros in 2006 to merely 0.5 billion euros last year when FDI into the EU from the rest of the world increased by 89 percent, from 169 billion euros to 319 billion euros.

The low level of investment was in sharp contrast to their booming trade. In 2007, the EU remained China's largest trading partner, while China continued to be the EU's second largest trading partner.

It also made China lag behind the other three major emerging economies. Russia took in 17.1 billion euros in European investment last year, while the flow of European cash into Indian firms surged more than fourfold to 10.9 billion euros and Brazil attracted 7.1 billion euros of EU FDI.

In 2007, the United States and Canada were the two leading investment destinations for the EU. The 27-nation bloc invested 113 billion euros in the US and 58 billion euros in Canada, compared with 79 billion euros and 30 billion euros respectively in 2006.

The US was also the largest source of foreign investment for the EU, investing 145 billion euros in the EU in 2007, compared with 74 billion euros in 2006.

Among EU member states, Britain, Luxembourg and Germany were the main actors in EU FDI outflows, with Britain accounting for 29 percent of the total, Luxembourg 19 percent and Germany 12 percent.

Britain was also the main recipient of FDI, with 27 percent of the total EU inflows going into the country, followed by Luxembourg's 16 percent and France's seven percent.