FDI declines for first time in four years

Inbound foreign direct investment on the mainland fell in 2009 for the first time in four years as foreign companies tightened their belts owing to the global financial crisis.

The country attracted US$90 billion from foreign firms investing in its factories and other assets last year, 2.6 per cent less than in 2008, the Commerce Ministry said yesterday.

However, last month, the mainland drew US$12.1 billion in foreign investment, up 103 per cent from a year earlier, ministry spokesman Yao Jian told a news conference.

December has often reflected rises in inbound foreign investment for accounting reasons, although it was the fifth consecutive month of year-on-year growth.

China attracted a record US$92.4 billion in foreign investment in 2008, an increase of 23.6 per cent on 2007.

The country has been the main destination of overseas investment, which surged after it joined the World Trade Organisation in 2001.

The government approved the establishment of 23,435 overseas-funded ventures in 2009, down 14.8 per cent from a year earlier.

But in December, it approved 2,835 companies, an increase of 10.7 per cent.

Yao said more than half of last year's foreign investment - 52 per cent or US$46.77 billion - went into manufacturing, a fall of 6.26 per cent year on year. The service sector attracted US$37.87 billion, down 0.67 per cent.

Actual use of the investment in the real estate sector was US$16.8 billion, a 9.65 per cent decline.

China's non-financial outbound investment in overseas markets was US$43.3 billion, up 6.5 per cent.

Of the total outbound investment, US$17.5 billion or 40.4 per cent was used in mergers and acquisitions, technology introduction, marketing and energy and resources.

Yao said China's exports would make a slow recovery this year, despite robust growth last month. Exports surged 17.7 per cent in December to snap a 13-month falling streak, while imports jumped 55.9 per cent, the government said this week, cementing the country's new status as the world's biggest exporter.

With trade data for all of 2009 now out, the country's crowning as the top exporter is expected to be confirmed when Germany releases full-year trade figures on February 9.

'Both exports and imports will only stabilise at a relatively low level this year, and I believe the most ideal situation is to reach 2008's level,' Yao said.

Belt tightening

China attracted US$90 billion in foreign direct investment last year, a decline of: 2.6%

Downturn

While foreign direct investment in the mainland doubled year on year last month, for the full year the country reported its first fall in inflows in four years

Foreign direct investment (US$b)

Dec 08: 6
Jan 09: 7.5
Feb 09: 5.8
Mar 09: 8.4
Apr 09: 5.9
May 09: 6.4
Jun 09: 9
Jul 09: 5.4
Aug 09: 7.5
Sep 09: 7.9
Oct 09: 7.1
Nov 09: 7
Dec 09: 12.1

SOURCE: REUTERS