China lures less foreign funding | Business| Economy and finance news from a German perspective | DW | 19.10.2012
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China lures less foreign funding

China appears less attractive to global capital as foreign direct investment has continued a 10-month slide, with a brief interruption in May. The downturn corresponds with weaker demand for Chinese products.

In September, foreign direct investment (FDI) in China fell 6.8 percent to $8.4 billion (6.4 billion euros), compared with the same month of 2011, the Commerce Ministry in Beijing announced on Friday.

In the first nine months of this year, total capital inflow to the world's second biggest economy slowed to $83.4 billion, which was 3.8 percent less than in the same period last year.

The ministry attributed the slowdown to sluggish global growth, the eurozone debt crisis, rising costs and weak domestic demand.

Commerce Ministry spokesman Shen Danyang said China was in an "adjustment stage," which, however, was no reason for the government to doubt China's long-term appeal to foreign investors.

"We think the general trend of FDI development in the country remains positive and healthy," he told a news conference Friday.

According to the official data, direct investment from the European Union dropped 6.3 percent on year to reach $4.8 billion in the first nine months of 2012. In that period, capital inflow from United States investors came in at $2.37 billion, down 0.63 percent. Asia's ten most advanced economies, including Hong Kong, Japan and South Korea among others, invested 4.9 percent less with an overall FDI volume of 70.99 billion.

Shen Danyang noted that more foreign capital was flowing into less developed central China, marking a "positive change" in the quality and structure of capital attribution.

On Thursday, the latest economic data for the third quarter showed Chinese growth slowing for the seventh consecutive quarter to a rate of expansion of 7.4 percent - its worst performance since 2009. However, the performance was better than expected by economists, indicating that the country's growth slump may have bottomed out.

uhe/cg (AFP, dapd)

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