China's Foreign Direct Investment Up 46%

July 11, 2008
$9.6 billion poured into China in June

In the first half of 2008, foreign direct investment into China grew by 45.6%, the government said July 11. Foreign enterprises invested $52.4 billion in China from January to June.

But foreign direct investment was $42.8 billion in the first five months of the year, according to previously released data, meaning $9.6 billion poured into the country last month.

Foreign direct investment, along with booming exports, is one of the top factors behind China's massive build-up in foreign exchange reserves and excess liquidity in the financial system.

China's foreign exchange reserves, already the world's largest, hit $1.80 trillion at the end of May, up more than 17% from the end of 2007, triggering government concerns of a surge in hot money inflows. Speculative money is entering China as investors hope for gains from factors such as the continued strengthening of the yuan.

As part of its efforts to crack down on hot money, China announced last week it would launch a forex monitoring system to scrutinize checks on fraudulent export transactions that disguise the movement of speculative money.

Copyright Agence France-Presse, 2008

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