FDI keeps increasing in August

Foreign direct investment into China maintained its momentum in August, adding to signs of an upturn in the economy and growing investor confidence.

The Ministry of Commerce said on Tuesday that FDI inflow, excluding that to financial services, rose to $79.77 billion from January to August, up 6.37 percent year-on-year.

In August, the inflow was $8.38 billion, up 0.62 percent year-on-year but substantially lower than the 24.13 percent growth in July and 20.12 percent increase in June. However, ministry spokesman Shen Danyang said this is due mainly to a high base figure a year ago.

"Fluctuations in a single month are insufficient to reflect the big picture on FDI. There is no need to worry about (a reverse) in the trend," Shen said.

FDI to China reversed its slide in February and has maintained continuous growth, effectively supporting competitiveness of the nation's economy and global investors' confidence in the country's investment environment, he said.

But FDI globally has remained sluggish since last year amid slow economic growth.

"China's attraction for FDI this year is outstanding compared with other economies, and this growth will be steady in following months," Shen said.

FDI inflow for the whole year is expected to be higher than last year, although the yearly growth rate will probably not be very high. "We now focus more on the quality, structure and effectiveness rather than on growth pace," Shen said.

China's economy grew by 7.7 percent in 2012, the slowest in 13 years. Growth stood at 7.7 percent for the first three months of this year and slowed to 7.5 percent from April to June, but recent data suggest a rebound in growth.

Premier Li Keqiang said during the "Summer Davos" in Dalian, Liaoning province, last week that China's economy has entered a phase of medium and high growth. He reassured the world about the national economy's health, saying China will reach its target of 7.5 percent growth this year despite the complex global economic situation.

Lian Ping, chief economist at the Bank of Communications, said, "China's economic growth has showed more signs of recovery and the FDI inflow is, on the whole, in line with the trend."

The central government's measures to stabilize economic growth have strengthened global investors' confidence, while the efforts of deepening reforms helped investment and boosted the FDI inflow, Lian said.

"FDI in China will maintain steady growth in view of the potential investment opportunities in the country."

Responding to recent financial market turmoil in developing economies, Shen said, "China's economic growth is improving, and the trend will not be changed or affected by the temporary difficulties in some emerging countries."

Investment into the Chinese mainland comes mainly from 10 Asian countries and regions, including Hong Kong and Taiwan, and this investment rose by 7.87 percent year-on-year to $68.63 billion for the first eight months of the year.

Investment from the European Union rose by 24.3 percent year-on-year to $5.44 billion, while that from the United States increased by 18.04 percent to $2.50 billion.

Ge Shunqi, deputy head of the Institute of International Economics at Nankai University in Tianjin, spoke highly of China's FDI performance compared with weak willingness to invest across borders worldwide.

He said that China's FDI structure has also improved.

"Service sectors surpassed manufacturing to attract more than half of the FDI inflow in recent years. Amid the gradual opening-up, services, including telecoms, education and tourism, will be the main driver of China's FDI inflow," Ge said.

China's outbound direct investment in non-financial sectors increased by 18.5 percent year-on-year to $56.5 billion from January to August.

Investment in the seven major economies — Hong Kong, ASEAN, the EU, Australia, the US, Russia and Japan — was $39.11 billion, up 3 percent year-on-year. But investment in Japan fell by 25 percent.

Shen said: "China's outbound investment will maintain robust growth. Perhaps it won't take too long for the size of overseas investment to outstrip FDI into China."

As for trade prospects for 2013, Shen said China's foreign trade faces mounting difficulties in view of the continued slow growth in the global economy and particularly from the recent financial turmoil in emerging economies.

"But we still believe that exports and imports will improve in the following months owing to strengthened recovery in developed economies," Shen said.