Foreign investment in China slumps in July: govt

Monday 18 August 2014 07.35
Investment into China from the EU slumped 17.5% to $3.83 billion in the first seven months of 2014
Investment into China from the EU slumped 17.5% to $3.83 billion in the first seven months of 2014

Foreign direct investment (FDI) into China dropped by more than a sixth year-on-year to a two-year low in July, the government said today, but denied any link to Beijing's multiple probes into foreign companies. 

FDI - which excludes investment in financial sectors - fell 16.95% in the month to $7.81 billion, the commerce ministry said, its lowest since July 2012, when it was $7.579 billion. 

The fall saw FDI in the first seven months decline by 0.35% to $71.14 billion, eliminating a small increase at the half-year stage.

Chinese authorities have in recent months launched anti-monopoly, pricing and other inquiries into foreign firms in sectors ranging from car manufacturing and pharmaceuticals to baby milk.

The probes have raised concerns among investors that Beijing is targeting overseas companies. 

But commerce ministry spokesman Shen Danyang denied any connection between the investigations and the fall in FDI. 

"It is only normal that there is volatility of FDI in individual months when China steps up efforts to balance the economic structure," he said. 

"It is not sufficient enough to reflect the general trend. It must not be linked to the anti-monopoly probes into some foreign invested companies or be associated with other baseless  speculations," he added.

In the first seven months of the year, investment from Japan crashed 45.4% to $2.83 billion, with that from the EU slumping 17.5% to $3.83 billion and from the US down a similar 17.4% to $1.81 billion. 

But investment from South Korea - which has been enjoying closer diplomatic ties with China - rose 34.6% to $2.92 billion, and from Britain, the home of troubled pharmaceutical giant GSK, soared 61.2% to $730m.