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Inward Chinese FDI Decelerates As Its Outward Investment Soars

by Mary Swire,, Hong Kong

20 August 2012

China’s Ministry of Commerce has disclosed that, in the period from January to July this year, while the rate of foreign direct investment (FDI) into the country showed marked falls due to worldwide economic conditions, Chinese non-financial investment into overseas companies soared.

Affected by the present global economic uncertainty, FDI into China from January to July 2012 reached only USD66.67bn. While that amounted to a 3.6% reduction over the seven months compared with the same period last year, the actual slowdown in investment to USD7.58bn in the month of July itself had reached 8.7%, pointing to an increasing rate of decline.

The geographical spread of investment sources into China has also varied markedly. In January-July, China's FDI from the US, at nearly USD2bn, rose by 1%, while that from the recession-hit EU fell by 2.7%, to almost USD4bn. However, German investment in China was USD960m, up over 27%.

While there were large fluctuations between single countries, overall FDI from ten Asian countries (Hong Kong, Macau, Taiwan, Japan, the Philippines, Thailand, Malaysia, Singapore, Indonesia and South Korea) amounted to USD57.3bn, a fall of 3.8%. Hong Kong’s investment in the Mainland, at USD41.9bn, fell by 7.5%.

On the other hand, Chinese companies substantially increased their outward FDI during the same period. Between January and July 2012, Chinese investors, in a total of 117 countries and regions and over 2,400 separate investments, accumulated non-financial overseas FDI of USD42.22bn, an increase of 52.8% over the same period last year.

Hong Kong, members of the Association of Southeast Asian Nations and the US showed double-digit growth in Chinese FDI - 67.7%, 36% and 29.6% respectively – while FDI into the EU rose by only 1.2%. In contrast, investment into Australia and Japan was cut by 43% and over 25% respectively.

As at the end of July 2012, China’s cumulative non-financial overseas FDI had reached USD364.3bn.

TAGS: investment | business | foreign direct investment (FDI) | equity investment | Australia | China | Macau | Philippines | Singapore | Taiwan | Thailand | Hong Kong | Indonesia | Korea, South | Malaysia | United States | Japan

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