March FDI in China falls 1.47% year-on-year

Li Yi / China Daily

Foreign direct investment in China fell in March, the first year-on-year contraction since January 2013, but officials and experts said monthly fluctuations do not reflect long-term trends.

According to the Ministry of Commerce's data on Thursday, FDI in China dipped 1.47 percent in March from a year earlier to $12.24 billion. The drop dragged FDI growth in the first quarter to 5.5 percent, amounting to $31.55 billion. By comparison, FDI grew 10.44 percent in the first two months.

FDI registers healthy growth

China's FDI rose 16.11% in January

"It is normal for investments to have some monthly fluctuations," said Shen Danyang, a ministry spokesman. "Many factors, such as a single big-ticket investment deal, a changing macroeconomic environment and the fluctuation of the renminbi exchange rate could all affect the figures. We are confident about the steady growth in FDI for the whole year. We, along with many other research institutes and foreign chambers of commerce, think China remains an important destination for foreign investment. Multinationals remain upbeat about our investment environment."

A close look at the first-quarter FDI figures showed investment from major developed economies fell, while that from emerging economies held steady.

Investment from Japan plunged 47.2 percent to $1.21 billion in the quarter, while investment from the European Union slid 24.5 percent to $1.55 billion. Investment from the US was down 1.9 percent at $1.04 billion while that from members of the Association of Southeast Asian Nations rose 7.84 percent to $1.97 billion.

Commenting on the major contraction in EU FDI, Mei Xinyu, an expert at the Chinese Academy of International Trade and Economic Cooperation, a think tank under the Commerce Ministry, said European companies' confidence was undermined by a long-period of low growth. China's reduced appetite for luxury items may be another major reason for European companies to scale back their deployment in the market.

Rising uncertainty caused by tension between Japan and China, along with Japanese firms' weakening competitiveness in the global context, explained Japan's tumbling investment in China, said Mei.