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Foreign investment up amid uncertain outlook

By Wang Yanlin  (Shanghai Daily)

09:39, May 17, 2013

Foreign direct investment in China rose for the third consecutive month in April with more money coming from European countries and the United States, the Ministry of Commerce said yesterday.

But analysts say the outlook for foreign investment remains uncertain as its growth momentum eased for a second month.

Foreign investors channeled a total of US$8.43 billion into China last month, up 0.4 percent from a year earlier, according to the ministry.

The pace slowed from the gain of 5.65 percent in March and 6.32 percent in February, although it was still much better than January's fall of 7.3 percent.

Economic recession

Ministry spokesman Shen Danyang said China's inbound foreign investment had been relatively stable against the backdrop of shrinking global investment amid economic recession.

"The inbound foreign investment growth has been positive for three months in a row, indicating China's economic competitiveness and foreign investors' confidence in the country," Shen said.

According to a latest report by consulting firm KPMG, China has become the top destination for sourcing among multinational companies outside their home country with these companies moving more of their research units close to production bases.

However, the investment outlook remained murky as China's overall economic performance in recent months fell short of expectation and pointed to a fragile recovery, analysts said.

"China's economic recovery has been softer than expected since March, which may discourage foreign investment in the short term," said Li Maoyu, an economist at Changjiang Securities Co.

China's gross domestic product expanded 7.7 percent from a year earlier between January and March, weakening from the pace of 7.9 percent in the final quarter of last year.

The World Bank recently lowered its projection of China's growth this year to 8.3 percent from the previous 8.4 percent, citing risks in the property sector, financial system and local government liabilities.

During the January-April period, investment from the 27-member EU rose 29.7 percent to US$2.5 billion, while capital from US firms jumped 33.2 percent to US$1.4 billion.

China attracted a total of US$38.3 billion foreign investment in the first four months, up 1.21 percent annually.

Meanwhile, China's outbound direct investment surged 27 percent to US$29.5 billion in the first four months, indicating Chinese investors' strong enthusiasm for globalizing their businesses.

This year's China International Fair for Investment and Trade, an investment promotion event, is being held in Xiamen, Fujian Province, from September 8 to 11.

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