China FDI data indicates sharp slowdown in February

BEIJING (REUTERS) - China drew US$19.3 billion (S$24.39 billion) in foreign direct investment (FDI) in the first two months of 2014, up 10.4 per cent from a year earlier, the Commerce Ministry said on Tuesday, indicating a sharp slowdown in February due to the Lunar New Year holidays.

Ministry spokesman Shen Danyang told a media briefing that the ministry did not release data for February alone due to seasonal distortions caused by the Lunar New Year holidays, when factories, offices and shops often close for long periods.

Based on the published data, FDI in February alone was US$8.6 billion, up 4.1 per cent from a year earlier, slowing sharply from a 16.1 per cent increase in January.

FDI from the top 10 Asian economies rose 11.6 per cent in the first two months to US$16.9 billion, while investment from the United States jumped 43.3 per cent to US$711 million and investment from the European Union fell 13.8 per cent to US$1.1 billion, the ministry said.

"Despite weak international investment and the fact that we face various problems in our development, the FDI data shows that foreign investors are still very confident," Shen said.

Shen said that it is normal to see greater two-way fluctuations in the yuan and that the government will still keep the yuan basically stable, echoing recent central bank comments.

On Saturday, the People's Bank of China doubled the yuan's daily trading range, so that it can now rise or fall 2 per cent around the daily midpoint rate.

China's exports could be affected by global uncertainties this year, Shen said without giving details. The government aims for 7.5 per cent annual growth in foreign trade this year.

The government has shifted its focus on attracting FDI inflows to high-end manufacturing, a modern services sector and energy-saving and environmental industries, while encouraging local companies to quicken investment overseas.

China's service sectors received US$10.6 billion in FDI in the first two months, up 25.5 per cent from a year earlier and accounting for 54.9 per cent of the total, the ministry said.

Outbound direct investment by Chinese firms totalled US$11.54 billion in the January-February period, down 37.2 per cent from a year earlier, it added.

The sharp drop was due to a high comparison base caused by offshore oil and gas producer CNOOC's $15 billion acquisition of Nexen in early 2013, Shen said.

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