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Foreign Investment into China Slips in 2012

Jan. 16, 2013
A ministry spokesman downplayed the overall decline in FDI, saying a study by the ministry did not find foreign investment leaving the country on a large scale.

Foreign direct investment in China declined for the first time in three years in 2012, official data showed on Wednesday, amid economic turmoil in developed markets and a slowdown in China.

FDI, which excludes financial sectors, into China declined 3.7% to $111.72 billion last year from 2011, the commerce ministry announced.

It slipped from an all-time high of $116 billion recorded in 2011 and was the first year-on-year decrease since 2009, according to previous figures.

China Investment Overseas Soars

Ministry spokesman Shen Danyang said, meanwhile, that in 2012, Chinese directly invested $77.22 billion overseas in non-financial sectors in 141 countries and regions, an increase of 28.6% from the year before.

The investment figures come as China's economy slowed throughout most of 2012, while developed economies such as the United States, the European Union and Japan largely remained weak.

For the month of December FDI into China also fell, slipping 4.5% from the same month in 2011 to $11.7 billion, the commerce ministry said.

Economic growth in China has declined for seven straight quarters through the three months ended September, though recent positive signs have led economists to expect a rebound in the fourth quarter and this year.

GDP growth figures for the fourth quarter and all of 2012 are scheduled to be released on Friday.

The median forecasts in surveys of economists by AFP are for growth of 7.8% in the fourth quarter and 7.7% in 2012. Economists polled also expect the economy to grow 8% in 2013.

Asia Provides Most Investment

The lion's share of FDI into China comes from 10 Asian countries and economies including Japan, Taiwan and Hong Kong. That figure declined 4.8% last year to $95.74 billion, the ministry said.

Investment from the European Union fell 3.8% to $6.11 billion, the ministry said.

But investment from the United States and Japan increased.

Inflows from the U.S. gained 4.5% to $3.12 billion, while those from Japan increased 16.3% to $7.38 billion.

"The growth momentum of investment from some developed countries including the United States and Japan was good," the ministry said in a statement.

However, growth of investment from Japan last year slowed from the 33.2% gain recorded in 2011 amid a spiraling dispute between Beijing and Tokyo over uninhabited islands in the East China Sea.

Shen, the ministry spokesman, downplayed the overall decline in FDI, saying a study by the ministry did not find foreign investment leaving the country on a large scale.

"We still actively encourage foreign investment," he said, adding that China has been the largest foreign investment host nation among developing countries for 20 consecutive years.

In 2013, the ministry will "keep fundamental policies on foreign investment stable and the overall size of FDI stable," he said.

Copyright Agence France-Presse, 2013

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