Coronavirus: foreign direct investment in China rises for first time since start of pandemic

Foreign direct investment in China rose 8.6 per cent in April from a year earlier, but was still down 8.4 per cent for the first four months of 2020

Commerce Ministry noted the rise benefited from a low base in April 2019, but still showed improvement in investor confidence in China

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Foreign direct investment (FDI) rose 8.6 per cent from a year earlier to US$10.14 billion. In yuan terms, FDI increased 11.8 per cent to 70.36 billion yuan. Photo: AFP

Published: 7:45pm, 14 May 2020Updated: 7:45pm, 14 May 2020

Foreign direct investment in China turned positive in April for the first time since the start of the coronavirus outbreak, according to the data released by the Ministry of Commerce on Thursday.

Foreign direct investment (FDI) rose 8.6 per cent from a year earlier to US$10.14 billion. In yuan terms, FDI increased 11.8 per cent to 70.36 billion yuan.

The data comes amid an intensifying debate about whether the coronavirus outbreak will accelerate a supply chain exodus from the world’s second largest economy.

The gain was the first year-on-year improvement since January, when the coronavirus began to spread rapidly from the central Chinese city of Wuhan, where it was first detected.

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The ministry, though, sounded a note of caution, noting the rebound in April came against a low base level in the same period last year. Nevertheless, the ministry said the rebound showed that investor confidence in China was returning.

The April reading partly reversed the deep contractions in FDI seen in February and March, when it fell 25.6 per cent and 14.1 per cent, respectively, in yuan terms.

For the first four months of 2020, FDI in China decreased 8.4 per cent in US dollar terms, with the decline narrowing by over a third from the drop recorded in the first quarter.

Direct investment from the European Union shrank 29.1 per cent in the first four months of the year, although the ministry did not provide details of investment from the United States.