China’s inbound foreign investment surges 18.7 per cent in August, as bank loans grow more than expected

Foreign direct investment (FDI) into China jumped 18.7 per cent in August from a year earlier, to 84.1 billion yuan (US$12.3 billion), the commerce ministry said on Friday.

In the January-August period, FDI rose 2.6 per cent from a year earlier, to 619.8 billion yuan.

The investment inflows into China come as Beijing steps up efforts to woo foreign businesses, including American firms, to help offset an increasingly unstable external environment. In recent months, China has clashed with Washington over Hong Kong, the coronavirus pandemic, the South China Sea and Xinjiang.

Meanwhile, Chinese banks extended 1.28 trillion (US$187.25 billion) in new yuan loans last month, up 29 per cent from July and slightly exceeding analysts’ expectations, according to data released by the People’s Bank of China (PBOC) on Friday.

“We anticipate a further acceleration in lending in the coming months. A further ramp-up in government bond issuance is planned over the remainder of the year,” said Julian Evans-Pritchard, senior China economist at Capital Economics.

“What’s more, stronger investment demand on the back of the ongoing economic recovery should prop up issuance of corporate bonds and equity.”