Foreign direct investment coming into the mainland is expected to be steady or slightly higher this year, despite a 2.94 per cent decline in the first half, according to Vice-Minister of Commerce Wang Chao.
This was because recent economic stimulus measures were expected to improve growth and lift overseas investors' confidence, he told an investment seminar in Hong Kong yesterday.
'In the first half, a batch of large-scale foreign-invested projects were initiated,' Wang said. 'These projects are expected to be implemented in the second half, which will result in steady or somewhat higher foreign direct investment for the full year.'
The mainland attracted US$59.1 billion of foreign direct investment in the first half, Wang said, compared with US$60.89 billion in the same period last year.
In June alone, FDI was US$12 billion, down 6.7 per cent from the same month last year, based on official figures for the first five months.
Foreign direct investment receipts dwindled in the first half due to the global economic downturn and the sovereign debt crisis in Europe, which has hit investments and imports from the region.
Investment from Europe fell 5.1 per cent year on year in the first five months to US$2.78 billion, while that from 10 Asian nations and regions including Hong Kong slid 1.4 per cent to US$40.66 billion, according to the ministry's data.
Much of the FDI from Hong Kong is known to come from the mainland and is 'round-tripped' back as disguised investment, often as part of schemes to avoid profit taxes on the mainland.
The poor investment inflow so far this year is reminiscent of the days of the global financial crisis.
FDI shrank 2.6 per cent in 2009, after growing 23.6 per cent in 2008. Growth rebounded strongly to 17.4 per cent in 2010, before slipping to 9.7 per cent last year.
The mainland's economic growth fell to 7.6 per cent in the second quarter of this year, the slowest in three years, from 8.1 per cent in the first quarter. Import and export growth, by value, in the first half plummeted to 8 per cent, from 22.5 per cent last year.
To boost growth, Beijing has cut interest rates twice in the past month, expanded bank credit and sped up approval of new fixed-asset investment projects in recent months.
Wang said he expected imports and exports to grow 10 per cent for the full year, adding Beijing would try to simplify administrative procedures to encourage trade.