Foreign investment in China suffers first fall in three years

By Fran Wang, AFP

BEIJING — Foreign direct investment (FDI) in China declined for the first time in three years in 2012, official data showed on Wednesday, amid economic turmoil in developed markets and a slowdown at home. But Chinese direct investment overseas surged almost 30 percent from the previous year, with analysts saying that firms were increasingly looking to expand abroad as space for growth in China shrank. FDI, which excludes financial sectors, into China declined 3.7 percent to US$111.72 billion last year from 2011, the commerce ministry announced.

It slipped from an all-time high of US$116 billion recorded in 2011 and was the first year-on-year decrease since 2009, according to previous figures. Ministry spokesman Shen Danyang said, meanwhile, that in 2012, Chinese directly invested US$77.22 billion overseas in non-financial sectors in 141 countries and regions, an increase of 28.6 percent from the year before. Overseas investment is set to exceed inbound FDI in coming years as Chinese firms expand abroad due to overcapacity and limited room for growth at home, and as foreign companies cut back in China due to rising costs, an analyst said. “It is very likely that China will become a (net) capital exporting country,” Shen Jianguang, an economist with Mizuho Securities Asia Limited, told AFP, adding he expects that to happen in two to three years.