22 October 2016
Foreign direct investment in China has remained strong in recent months. Photo: Bloomberg
Foreign direct investment in China has remained strong in recent months. Photo: Bloomberg

China FDI up 2.2% at US$12.4 bln in March

Foreign direct investment in China rose 2.2 percent at US$12.4 billion in March from a year earlier, while outbound flows posted a milder rise, as foreign corporate investors remain undeterred by weakening domestic economic performance.

For the first quarter, inbound FDI was up 11.3 percent at US$34.88 billion, Reuters reported.

The data follows a series of disappointing data releases, highlighting flagging domestic fixed asset investment, including in property, and slowing industrial activity.

Foreign investment projects take time to conceive and implement, making FDI a lagging indicator of general confidence, but they have remained strong in recent months nevertheless, according to the news agency.

Exceptionally strong growth in FDI inflows in the first two months of the year, including a nearly 874-percent jump for Saudi Arabia and a 367-percent gain for France, were due to one-off deals, commerce ministry spokesman Shen Danyang said in March.

In contrast, March trade data released on Monday was extremely weak, with exports falling 15 percent on the year, the worst performance for March since 2009, in the depths of the financial crisis.

Some analysts have posited a continued seasonal effect from this year’s very late Lunar New Year holiday, which fell on Feb. 19, making it the first in late February since 2007. Chinese economic activity usually recedes during the holiday as factories shut down and workers travel back to their home towns and villages.

Outbound investment for the first three months of the year rose 29.6 percent year on year to US$25.79 billion.

The government has been encouraging Chinese firms to invest abroad to make them more competitive internationally, utilize surplus capacity, and help slow the rapid build-up of foreign exchange reserves.

Inbound FDI in China rose just 1.7 percent in 2014, the slackest pace since 2012.

That weak performance highlighted a cooling economy which is spurring more Chinese firms to plough money into overseas assets — a trend that could soon overtake inbound investment.

Last year, China drew a record FDI of US$119.6 billion, while outbound investment rose 14.1 percent to a new high of US$102.9 billion, the report said.

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