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China FDI inflows quicken in July despite slowing growth

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(Globalpost/GlobalPost)

By Langi Chiang and Kevin Yao

BEIJING (Reuters) - Investment inflows into China quickened in July, the government said on Friday, suggesting foreign firms' confidence in the world's No.2 economy is holding up despite slowing growth.

China drew $71.4 billion in foreign direct investment (FDI)in the first seven months of 2013, up 7.1 percent from the same period of 2012, the Commerce Ministry said.

In July alone, China attracted $9.4 billion in FDI, up 24.1 percent from a year ago, quickening from the 20.1 percent pace in June -- the fastest in more than two years, although the amount was lower than June's $14.4 billion.

"This shows that foreign investors are still very confident in China's investment environment," Shen Danyang, the ministry's spokesman, told reporters.

The ministry said FDI from the United States rose 11.4 pct in the first seven months from a year earlier, while FDI from the euro zone grew 16.7 pct, including a 58.3 pct jump in investment from Germany.

FDI from 10 Asian nations was up 7.7 pct, including a 55.2 percent rise from South Korea, and 612.6 pct rise from Thailand.

The ministry said FDI inflows into the manufacturing sector in the first seven months fell 2.4 pct from a year earlier, while investment in the service sector rose 15.8 pct.

China aims to lure more FDI in advanced manufacturing to help move its industry make more sophisticated, high-value products.

It has recently stepped up efforts to attract more investment into high-end services including logistics, research and development and education.

Premier Li Keqiang has been pressing for foreign investors to open service industries, including financial services, in a pilot free-trade zone in Shanghai.

A private factory survey this week reinforced signs of stabilizing in China's economy after the government took targeted measures to support the economy, including scrapping taxes for small firms, offering more help for exporters and accelerating investment in urban infrastructure and railways.

China's pace of economic growth slowed to 7.5 percent in the second quarter, down from 7.7 percent in the three months ending March 31 -- the ninth such deceleration in the last 10 quarters.

The ministry said there were signs in early August that China's trade performance was stabilizing.

"China's growth in imports and exports will hopefully stabilizes further in the next few months, with global demand improving steadily and the gradual implementation of a series of trade facilitation measures," Shen said.

China's exports rose a stronger-than-expected 5.1 percent in July from a year ago, while imports jumped 10.9 percent from a year earlier, the latest data showed.

Foreign firms' confidence in China appears to have outweighed fears of increased regulatory scrutiny following investigations into alleged price-fixing and monopolistic behavior by foreign companies selling milk formula and pharmaceuticals.

Chinese authorities have visited the offices of numerous foreign pharmaceutical firms in the past month, and police have accused British drugmaker GlaxoSmithKline <GSK.L> of bribery. GSK has said some of its Chinese executives appear to have broken the law.

(Editing by Eric Meijer)

http://www.globalpost.com/dispatch/news/thomson-reuters/130823/china-fdi-inflows-quicken-july-despite-slowing-growth