FDI increase ends 8-month run of declines

Foreign direct investment rebounded in February after dropping for eight consecutive months, signaling improving investor sentiment and confidence in the new leadership, analysts said.

FDI rose 6.32 percent year-on-year in February to $8.21 billion. This was the smallest monthly inflow for seven months, according to the Ministry of Commerce on Tuesday.

January's inflow was $9.27 billion, down 7.3 percent from a year earlier. And FDI in the January-February period fell 1.35 percent year-on-year to $17.48 billion, according to the ministry.

"The FDI rebound in February is good news and, in some way, an acknowledgement of China's economic competitiveness and global investor recognition of the country's investment environment and development prospects," Commerce Ministry spokesman Shen Danyang said.

He added that figures for the first two months cannot tell the whole year's picture and "our general judgment is that FDI will expand stably with no big ups or downs".

FDI is an important gauge of the external economy to which China's vast factory sector is oriented, though it is a small contributor to China's overall capital inflow compared with exports, which were worth about $2 trillion in 2012.

"The rebound indicates global investors are more optimistic about China's economic outlook ... and there is growing confidence that the new leadership will introduce practical reform measures," said Huo Jianguo, president of the Chinese Academy of International Trade and Economic Cooperation, a think tank affiliated to the Ministry of Commerce.

"Measures are likely to be introduced to enhance the environment for foreign enterprises in China," Huo said.

He urged the government to further open up high-end manufacturing and services to foreign investors, including sewage and garbage disposal, healthcare and insurance — sectors able to bring in greater FDI.