UpdateChina’s service sector draws bulk of FDI as manufacturing loses allure
Foreign direct investment in services up 30pc in the first two months to US$13.7b as manufacturing sector loses appeal amid rising labour costs
Foreign investors pumped US$8.6 billion of long-term funds into China in February, mainly in the services sector, in a further sign that overseas firms are taking advantage of the broad rebalancing of the world’s second-biggest economy.
FDI into China climbed 0.9 per cent from a year earlier. That followed a 29.4 per cent surge in January. FDI gained 17 per cent in the first two months from a year earlier to US$22.5 billion.
“FDI may show short-term fast growth if there are one or two big projects during the period,” Commerce Ministry spokesman Shen Danyang said at a regular press briefing.
In a growing sign that Beijing’s rebalancing efforts are taking effect while the manufacturing sector is gradually losing appeal amid rising labour costs, FDI into China’s services sector jumped 30 per cent year on year in the first two months to US$13.7 billion.
The share of services FDI accounted for 61 per cent of total national FDI, outpacing the 33.3 per cent share of investment in the manufacturing sector.
“FDI in the manufacturing sector has seen a falling [share], which is linked to China’s economic restructuring as the development enters a new normal,” Shen said.
The jump in inbound services investment was accompanied by a surge in outbound investment from Chinese firms, which soared 68.2 per cent to US$7.25 billion in February from a year earlier. Outward direct investment in the first two months grew 51 per cent to US$17.4 billion.