China's actualized foreign direct investment (FDI) shrank at its fastest pace in more than a year in January, according to data released Wednesday by the Ministry of Commerce.
FDI flows into the country fell by 7.3 percent year-on-year to $9.27 billion in the first month of 2013, not including injections into the fields of banking, securities and insurance, Shen Danyang, spokesman for the ministry, told a news conference in Beijing Wednesday.
The January reading marks the eighth month in a row of negative growth in foreign investment and the biggest fall in growth since December 2011.
"The sustained drop in growth is actually a reflection of the global trend, as major economies remain mired in uncertain recoveries," Huo Jianguo, director of the Chinese Academy of International Trade and Economic Cooperation under the Commerce Ministry, told the Global Times Wednesday.
China is still an attractive option for FDI from multinational corporations, but their investment enthusiasm has diminished because China's economic slowdown has cut the opportunities for high investment returns, Huo remarked. He called for more efforts from the government to improve the country's investment climate so as to facilitate more FDI flows.
Global FDI was down by 18 percent to an estimated $1.3 trillion in 2012, falling back to levels last seen in 2009, according to the latest Global Investment Trends Monitor report issued in January by the United Nations Conference on Trade and Development (UNCTAD).
In 2012, FDI inflows to China fell by 3.7 percent, the first annual drop in three years, but China remained the No.2 FDI destination in the world last year, trailing only the US, according to the UNCTAD.
"Although the actualized FDI fell substantially (in January), there are some good signs as well," Shen also said, citing improvements such as a considerable rebound in flows from the European Union.
Inflows from the US and major Asian economies including Japan were generally down in January compared to last year, while FDI from the 27 member countries of the EU surged by 81.8 percent year-on-year to $820 million during the month, according to the ministry.
The trend for the whole of 2013 cannot be judged based on data for a single month, but FDI flows into the country are likely to become more stable this year, Shen said.
"We expect that FDI will rebound modestly later in the year, as global business confidence improves and on the delayed impact of recovery in Chinese growth toward the end of 2012," Dariusz Kowalczyk, Hong Kong-based senior economist at Credit Agricole CIB, forecast in a research note Wednesday.
In contrast with the sustained decline seen in FDI, the country's outbound direct investment continued growing, rising 12.3 percent year-on-year to $4.9 billion in January.
Surrealistic impression shown in fog
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