FDI in China down for the first time in 28 months | business | Hindustan Times
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FDI in China down for the first time in 28 months

business Updated: Dec 15, 2011 21:53 IST

China's economic growth could be slowing further as data on Thursday showed the first year-on-year drop in foreign direct investment (FDI) in 28 months and a fresh fall in new orders signalled a further contraction in factory activity.

The data highlights increasing risks to China's growth emanating from a deterioration in developed market economies while domestic demand is being dented by government efforts to rein in rampant real estate inflation.

"Growth momentum remains weak with additional downside risks from exports and the property market not yet fully filtering through," said Qu Hongbin, chief China economist at HSBC.

A sharp drop in inflows from the US was a particular drag, slowing year-to-date growth in FDI flows to 13.2% from 15.9% in October's data. Still , total FDI in the year to date of $103.8 billion suggest 2011 is poised to be a record-breaking year.

"The purchasing managers' index (PMI), in December shrank after new orders fell.

The contraction indicated by the PMI came swiftly after commerce ministry data revealed the first year-on-year fall in foreign direct investment growth in China in 28 months.

November's $8.8 billion of commitments were down 9.8% on November 2010, the first fall since July 2009's 35.7% year-on-year collapse to $5.4 billion.