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China: FDI growth slowing down

June 18, 2015

Growth in foreign direct investment in China has slowed significantly, the country's Commerce Ministry has said. But it also noted that outward investment almost doubled in the first five months of the year.

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Shanghai Skyline
Image: AFP/Getty Images/J. Eisele

It is another indicator showing that the tide is turning in China's economy: though foreign direct investment (FDI) in China is still on the rise, recent growth rates are less impressive than in previous years.

In May, China's FDI, excluding financial sectors, increased by 7.8 percent to 57.4 billion yuan ($9.25 billion, 8.23 billion euros) from a year earlier, the Commerce Ministry said Thursday, after a 10.5 percent year-on-year rise in April.

For the first five months of the year, FDI increased by 10.5 percent to $53.83 billion.

At the same time, China's outbound direct investment (ODI) surged 47.4 per cent over the same period, and covered 3,426 overseas-based companies across 146 countries and regions, the ministry said.

Major growth indicators pointing down
FDI growth has slowed in recent years owing to rising costs, competition from Southeast Asian countries and concerns over official investigations targeting foreign companies doing business in China.

However, China's acquisition of foreign assets, particularly energy and resources, has become more active with firms encouraged to invest abroad to gain market access and international experience.

China's economy, the world's second biggest, expanded 7.4 percent last year, the weakest since 1990.

It slowed further to 7.0 percent in the January-March period, the worst quarterly result in six years.

tko/hg (dpa, AFP)

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