Industryweek 5989 China Flag Promogifcropdisplay1pngcropdisplay 0

Foreign Direct Investment in China Rebounds 5.3% in 2013

Jan. 16, 2014
FDI from the U.S. rose 7.1% to $3.35 billion.

BEIJING -- Overseas investment into China rebounded last year after declining in 2012, official data showed Thursday, as confidence in the country's growth potential picks up.

Investment by China also rose and officials said it could overtake the incoming total this year -- although Chinese businesses shied away from the European Union and Japan as market and political tensions become strained.

Foreign direct investment (FDI) into China, which excludes financial sectors, totalled $117.59 billion last year, the commerce ministry said, adding it had "steadily rebounded."

The figure is up 5.3% from the $111.72 billion posted in 2012, when it skidded 3.7% for the first time in three years in the face of economic weakness in developed markets and a growth slowdown at home.

Louis Kuijs, Hong Kong-based economist with Royal Bank of Scotland, said some strength in the economy, "especially in the second half of 2013," and Beijing's plan to transform its growth model helped investor confidence.

"The intentions of the government to change China's pattern of growth to increase the role of domestic demand perhaps stimulated foreign companies to invest more," he said.

Chinese overseas investment rose 16.8% to $90.17 billion last year, the ministry said, as mainland firms continue to buy foreign assets, particularly energy and resources, to power the world's number two economy.

"China's overseas investment will probably exceed FDI next year or in 2016, if not this year," ministry spokesman Shen Danyang said.

Though destinations such as Russia and the United States saw sharp increases, investment in the European Union and Japan fell.

Investment in the EU fell 13.6 percent at a time when the two sides are embroiled in trade disputes including on Chinese solar panels and European wine. There was also a 23.5 percent slump in investment in Japan, as Asia's two top economies remain engaged in a territorial row that has led to frostier relations.

The ministry did not provide total amounts to those destinations.

FDI from the EU into China jumped 18.1% to $7.2 billion. Investment from Japan to China slipped 4.3% to $7.1 billion.

Jeroen Dijsselbloem, Netherlands finance minister and president of the Eurogroup of eurozone finance chiefs, said Chinese officials did not bring up any concerns about investing in Europe during talks in Beijing.

"At least we certainly made clear from our side that Chinese investment is very welcome in Europe," he told reporters before the data release.

Markus Ederer, outgoing EU ambassador to China, said Chinese companies have far more access to Europe than vice versa.

"Would the Chinese ever allow a European company to lease a major port for 30 years?" he said, referring to Chinese state-owned global shipping giant Cosco's concession deal at the Greek port of Piraeus. "No."

"Would the Chinese ever allow a European company to take over a Chinese car company?" he added, referring to Geely's acquisition of Sweden's Volvo. "No."

Kuijs said beyond political reasons, rising wage and transport costs in China, along with environmental regulations, have prompted European and Japanese firms to move output to cheaper regions or closer to home.

"China is kind of moving up the value chain," he said. "But on the other hand, China is losing parts of the production chain that are now being done in cheaper countries."

Among China's outbound destinations, Russia soared 518.2% to $4.08 billion last year with a raft of projects under way, including in the energy sector.

Investment in the United States also surged, 125% to $4.23 billion. In September, shareholders of U.S. pork giant Smithfield Foods agreed a takeover by China's Shuanghui International, the biggest ever Chinese acquisition of a U.S. company. FDI from the U.S. rose 7.1% to $3.35 billion.

By far the most investment into China comes from a group of 10 Asian countries and regions including Hong Kong, Taiwan, Japan, Thailand and Singapore, and FDI from those economies rose 7.1% to $102.52 billion.

The ministry said FDI in the services sector made up more than half the annual total for the first time, accounting for 52.3%. For December alone FDI increased 3.3% year on year to $12.08 billion.

Copyright Agence France-Presse, 2014

Popular Sponsored Recommendations

How Manufacturers Can Optimize Operations with Weather Intelligence

Nov. 2, 2023
The bad news? Severe weather has emerged as one of the biggest threats to continuity and safety in manufacturing. The good news? The intelligence solutions that build weather ...

Process Mining For Dummies

Nov. 19, 2023
Here it is. Everything you need to know about process mining in a single book, written in the easy-to-understand, hard-to-forget style that ‘For Dummies’ manages so effortlessly...

How to Build Zero-Cost On-Site Solar and Storage Projects

Nov. 25, 2023
The Inflation Reduction Act offers tax credits, incentives, and financing that enable no-cost projects. In Enel’s eBook, discover the critical role that incentives play in your...

Digitally Transforming Data and Processes With Product Lifecycle Management

Oct. 29, 2023
Manufacturers face increasing challenges in product development as they strive to consistently deliver improved results. Discover how industry leaders are improving time-to-market...

Voice your opinion!

To join the conversation, and become an exclusive member of IndustryWeek, create an account today!