Investment in China takes a hit as Europe falters | Business| Economy and finance news from a German perspective | DW | 15.05.2012
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Investment in China takes a hit as Europe falters

Foreigners are investing less in China, the government in Beijing maintains. It says direct fund flows have dipped for six months in a row and cites Europe's ongoing economic woes as being critical.

China's foreign direct investment (FDI) dipped for the sixth consecutive month, the Ministry of Commerce announced in Beijing on Tuesday. It reported a 0.7-percent drop in overseas fund flows for April year-on-year, with investment in that month totaling $8.4 billion (6.54 billion euros).

April's fall took the total decline in foreign investment in China to 2.4 percent in the first four months of the current year, compared to the same period in 2011, ministry spokesman Shen Danyang said in a statement.

Ongoing European economic troubles largely contributed to the steady slowdown. Investment from the European Union fell by 27.9 percent from January through April as the eurozone sovereign debt crisis remained unresolved. By contrast, investment from the United States and Japan rose by 1.9 percent in the same period.

Fighting the slowdown

China's outbound investment, however, continued to soar in the first four months, increasing by a staggering 72.8 percent on the year and reaching $23.2 billion.

While Europe's own problems contributed largely to the fall in direct investment, signs of a struggling Chinese economy also weighed down on investor sentiment. Economic growth in the Asian country slowed to 8.1 percent year-on-year in the first quarter of 2012, the lowest quarterly figure for nearly three years.

China last weekend cut bank reserve requirements to free up an estimated 400 billion yuan ($63.5 billion) for lending in a bid to halt the further slowdown in the world's second-largest economy.

hg/ai (dpa, AFP)