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

Reuters | By, Beijing
Dec 15, 2011 09:53 PM 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.

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.

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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.

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"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.

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