FDI growth drops for first time in 3 years Go back »

2013-01-17 | All chapters

The country's foreign trade growth, which fell short of the 10 percent target by nearly four percentage points in 2012, is expected to keep pace with the economy in 2013, suggesting a slight pickup from the previous year, the ministry also said.

Total FDI into the country fell 3.7 percent in 2012 from a year earlier to $111.72 billion, data from the ministry showed Wednesday. It dropped slightly from a record high of $116 billion in 2011 and was the first decline since 2009.

"There is a slight decline in foreign capital inflow into the country with foreign investment in manufacturing industries showing a larger fall," ministry spokesman Shen Danyang said at a press conference Wednesday.

The migration of manufacturing from the country involved foreign-funded companies and domestic companies investing abroad. There is no large-scale pulling-out of foreign investment from China, Shen said, calling it quite normal.

"Following the burst of the financial bubble in 2008, developed countries including the US and some European countries began shifting their focus to the real economy, as evidenced by the new 're-industrialization' in the US. That also explains the backflow of some foreign capital to its home countries," said Bai Ming, a researcher at the Chinese Academy of International Trade and Economic Cooperation.  

One cause behind the FDI decline is that global corporations' profits were eroded in 2011 and 2012, so their leadership is more cautious about investment and preserving their cash, Andre Loesekrug-Pietri, managing partner of A CAPITAL, the leading China-Europe Private Equity Fund, told the Global Times.

"These data are not surprising as they reflect the current economic deceleration in developed economies. But we should keep in mind that these numbers are still very high and close to the record high FDI of 116 billion in 2011. China is still one of the largest recipients of FDI in the world," Loesekrug-Pietri said.

China was the largest recipient of FDI among developing countries for 20 consecutive years in 2012, Shen said.

Wednesday's data also showed FDI from the US and Japan both rose in 2012 while FDI from the EU fell 3.8 percent to 6.11 billion. 

The Chinese marketplace is becoming more competitive and prices are increasing. However this maturation in the marketplace has not been mirrored by the maturation of the regulatory environment, Dirk Moens, secretary-general of the European Union Chamber of Commerce in China told the Global Times.

However, Moens acknowledged that despite FDI decline, European companies continue to tell the chamber that they view the Chinese marketplace as being increasingly strategically important, as China's domestic consumption continues to increase rapidly.

Commerce Minister Chen Deming said Monday that FDI into China in 2013 is to stay at the same level with 2012.

Meanwhile, responding to a question whether China's trade growth target for 2013 will be set at 8 percent, Shen said the trade situation in 2013 is still severe and the country's trade target in 2013 is "to try to keep foreign trade to grow at roughly the same level as GDP growth."

China's GDP grew by 7.7 percent year on year in the first three quarters of 2012. Key economic figures for the last quarter, including GDP, are slated to be released Friday.

Source: Global Times