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World Bank: FDI in China to fall by 20% in 2009
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17:57, July 01, 2009

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The World Bank predicted on June 30 in Beijing that foreign direct investment in China would decrease by 20 percent in 2009. However, China will still be the top destination for FDI among developing countries.

Mansoor Dailami, manager of International Finance, Development Prospects Group of the World Bank said that global FDI would reach some 1.4 trillion USD in 2009, with some 385 billion USD to flow into developing countries.

That means China, which will attract 130 billion USD capital inflow according to the World Bank forecast, will have one-tenth of the global FDI and one-third of FDI in developing countries.

By 2008, China had remained the first destination of global FDI in developing countries for 17 years.

Mr. Dailami also thinks that China's outbound FDI to other countries, in the form of investment in infrastructure and resources projects in Africa, Russia, etc., is a positive factor in the world economy and at the same time could ease the pressure of forex reserve sterilization.

However, there are reports in China that an expert with China's Ministry of Commerce said China absorbed only two percent of the global FDI stock and only a very small share came from developed countries.

According to the Ministry of Commerce, China's actual use of FDI was down by 20.4 percent over the first five months of 2009. It was for the first time since the Asia Financial Crisis in 1998 that China’s actual use of FDI, the number of newly-funded foreign enterprises and contractual FDI all went down for eight months in a row.

The Ministry of Commerce disclosed that the government was working on new policies to reinforce foreign investors' confidence and encourage foreign investment that can promote industrial restructuring, employment, regional balance and energy efficiency.

Yao Jian, spokesperson for the Ministry, noted recently that China would remain a favorite destination of foreign investment with its improving business environment, enormous market potential and further opening-up of its manufacturing and service sectors.

By People's Daily Online

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