China January-September FDI slips as officials warn on trade

Fri Oct 19, 2012 12:16am EDT
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By Aileen Wang and Nick Edwards

BEIJING (Reuters) - China's foreign direct investment inflows fell 3.8 percent in the first nine months of 2012 from a year ago, extending the longest run of declines since the depths of the global financial crisis as stiff economic headwinds dent corporate spending plans.

The same slowdown in overseas markets led the Ministry of Commerce to warn on Friday that exports, too, face an uphill battle despite rosier-than-expected September data.

China drew $83.4 billion in foreign direct investment between January and September, with September's inflow alone down 6.8 percent on year-ago levels at $8.4 billion, the Commerce Ministry said on Friday.

"China's FDI inflows have entered a sort of adjustment period, as the total amount dropped over past months, but it was only a slight drop," Commerce Ministry spokesman Shen Danyang told a news conference.

"Meanwhile, the quality and structure of investment inflows have improved, therefore, we can say such an adjustment is normal and positive."

The shrinking FDI figure followed a raft of economic activity indicators released on Thursday that pointed to a mild recovery in the growth momentum in September, although the economy slowed for a seventh straight quarter in the July-September period.

Earlier data showed China's foreign exchange reserves, the world's largest, rose to $3.29 trillion at the end of September from $3.24 trillion at the end of June. The $50 billion rise came after a $65 billion drop in Q2.


A Starbucks logo hangs inside its outlet inside the Forbidden City in Beijing January 18, 2007. REUTERS/Claro Cortes IV