China Jan-Sept FDI slips

Oct 19 2012, 11:42 IST
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SummaryChina drew $83.4 bn between Jan and Sept, with September's inflow alone at $8.4 bn.

China's foreign direct investment inflows fell 3.8 per cent in the first nine months of 2012 from a year ago, extending the longest run of declines since the depths of the global financial crisis as stiff economic headwinds dent corporate spending plans.

The same slowdown in overseas markets led the Ministry of Commerce to warn on Friday that exports, too, face an uphill battle despite rosier-than-expected September data.

China drew $83.4 billion in foreign direct investment between January and September, with September's inflow alone down 6.8 per cent on year-ago levels at $8.4 billion, the Commerce Ministry said on Friday.

China's FDI inflows have entered a sort of adjustment period, as the total amount dropped over past months, but it was only a slight drop, Commerce Ministry spokesman Shen Danyang said.

Meanwhile, the quality and structure of investment inflows have improved, therefore, we can say such an adjustment is normal and positive.

The shrinking FDI figure followed a raft of economic activity indicators released on Thursday that pointed to a mild recovery in the growth momentum in September, although the economy slowed for a seventh straight quarter in the July-September period.

Earlier data showed China's foreign exchange reserves, the world's largest, rose to $3.29 trillion at the end of September from $3.24 trillion at the end of June. The $50 billion rise came after a $65 billion drop in Q2.

Uncertain global demand

Despite evidence of corporate caution in the face of uncertain global demand, China's trade showed signs of improvement last month, with exports rising at twice the rate expected by economists and imports returning to the path of expansion, suggesting Beijing's measures to underpin growth are starting to show results.

The commerce ministry's Shen warned that the September data was not enough to be optimistic.

We are happy to see that the September trade data has shown some positive changes. But with only a single month's figure, it is still not enough to judge a trend of recovery due to the complicated external economic environment, he said.

China rolled out an array of measures last month to help stabilise export growth, speeding payments of export tax rebates, easing access to bank loans and cutting fees.

China has an official target of 10 percent growth in both exports and imports for 2012. But some trade officials have cast doubt about the ability to achieve it given the uncertainties hanging over external demand.

Commerce Ministry data showed investment inflows from the European Union

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