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People's Daily Online>>China Business

Foreign investment falls amid turmoil in the West

By Wang Yanlin   (Shanghai Daily)

08:19, December 16, 2011

Foreign direct investment in China has fallen for the first time in 28 months, mainly due to economic problems in Europe and the United States.

A total of US$8.75 billion came from foreign investors last month, a reduction of 9.76 percent compared to the same period of last year, the Ministry of Commerce said yesterday.

The fall followed increases of 8.8 percent in October and 7.8 percent in September.

Although the total figure in a single month is easily affected by the progress of certain projects, it was noticeable there was less investment from Western countries.

"Declining investment from the United States and Europe is mainly responsible for the cut of foreign investment last month," said Shen Danyang, a ministry spokesman. "The drop is closely related to feeble economic conditions in the West. Also, the US is promoting its re-industrialization strategy, which creates some pressure for China to attract American investment in some high-value-added manufacturing sectors."

In the first 11 months, investment from the US slumped 23 percent year on year to US$2.7 billion, further deteriorating from a drop of 18 percent between January and October. Capital from the 27-member European Union only edged up 0.29 percent, the ministry's data showed.

In comparison, investment from emerging markets continued to grow strongly. Ten major Asian markets, including Japan, the Philippines, Thailand and Malaysia, jumped 17.9 percent annually in the first 11 months. "With risks of a worsening global economic climate next year, China should further diversify sources of foreign investment," Xue Jun, an analyst at CITIC Securities Co, said.

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