FDI into China falls 6.7% to $8.6bn in May

An employee instals an instrument panel on an assembly line at the BMW Brilliance Automotive in Tiexi,  Liaoning Province. Foreign direct investment into China fell 6.7% year-on-year to $8.6bn in May, the government said yesterday.

AFP

Beijing

 Foreign direct investment into China fell 6.7% year-on-year to $8.6bn in May, the government said yesterday, denying that a row with Vietnam was behind a slump in investment from southeast Asia.

For the first five months of the year, FDI – which excludes investment in financial sectors – was up 1.6% at $48.91bn, the commerce ministry said in a statement.

In April, FDI was $8.7bn.

“Investment from major countries and regions into China generally maintained a stable growth momentum,” the ministry said.

Over the January-May period, investment from the European Union dropped 22.1% to $2.58bn, with that from Association of Southeast Asian Nations (Asean) countries falling 22.3% to $2.54bn.  Funding from Japan – China’s fifth-biggest investor – plunged 42.2%, the ministry said, without giving an amount.

China has multiple territorial disputes with its neighbours, and tensions with Vietnam are at a peak after Beijing deployed an oil rig in disputed waters, but ministry spokesman Shen Danyang denied the row was responsible for the fall in Asean investment.

The statistics were based on specific projects and the comparison base also mattered, he told reporters.

“Generally China’s co-operation with Asean has not been affected by the current situation,” he said.  Beijing is also embroiled in a long-running dispute with Tokyo over islands in the East China Sea and Shen added: “The continued strains in China-Japan political relations will make the environment for bilateral economic co-operation deteriorate and may cause economic and trade relations to regress and affect companies’ will to co-operate.”

“The responsibility is not China’s,” he added.

China’s top investors in the five-month period were Hong Kong, Taiwan, Singapore, South Korea and Japan, the ministry said.

Investment from South Korea and Britain jumped 87.9% and 62.2% respectively, while that from the US dropped 9.3%, the ministry said, without providing values.

Foreign investment into China rebounded in 2013 to $117.59bn, though slowing growth in the world’s second-largest economy could suppress inflows this year.

China’s economy expanded 7.7% in 2013, the same as 2012 – the worst pace since 7.6% in 1999. Beijing’s official growth target for this year is 7.5%, also the same as last year’s.

It grew 7.4% in the first three months of 2014, the worst pace since a similar 7.4% expansion in the third quarter of 2012.