Foreign direct investment into China rises in April despite country's slowing growth

BEIJING (AFP) - Foreign direct investment (FDI) into China jumped more than 10 per cent year-on-year in April, the commerce ministry said Friday, accelerating significantly from previous months despite slowing growth in the world's second-largest economy.

FDI, which excludes financial sectors, rose 10.5 per cent to US$9.61 billion, the ministry said, after rises of 2.2 per cent in March and only 0.9 per cent in February.

For the first four months of the year, it increased 11.1 per cent to US$44.49 billion, the ministry said, describing it as "stable" in a statement.

"Investment in the service sector increased rapidly," ministry spokesman Shen Danyang told reporters.

China's service industries saw FDI rise 24.8 per cent year-on-year in the first four months, contrasting with a 5.4 per cent fall in manufacturing investment.

In the January-April period, investment from the 28-member European Union rose 22.2 per cent to US$2.52 billion.

But from Japan it fell 7.8 per cent to US$1.44 billion, and from the US it slumped 28.4 per cent to US$880 million.

China drew a total of US$119.6 billion of FDI in 2014, up 1.7 per cent, while overseas direct investment (ODI) surged to US$102.9 billion, rising 14.1 per cent and passing the US$100 billion mark for the first time as Chinese companies look elsewhere with the domestic economy slowing.

China's gross domestic product expanded 7.4 per cent last year, the slowest since 1990, and growth weakened further to 7.0 per cent in the January-March period, the worst quarterly result in six years.

Authorities have taken a series of steps to stimulate the economy, including a third interest rate cut in six months at the weekend.

China's ODI rose 36.1 per cent to US$34.97 billion in January-April, the ministry said.

Investment into the European Union leaped 487 per cent, largely due to a previously announced petrochemical deal in the Netherlands, and it increased 33.5 per cent into the US, but into Australia it plummeted 65 per cent, the ministry said without giving totals.

It did not immediately provide monthly figures for April's ODI.

ODI into Germany surged 246 per cent year-on-year in the first quarter to US$210 million, Shen said.

The two economies are "strongly complementary" and Beijing will continue to "encourage and support" Chinese companies investing in Germany, he added.

"Investment cooperation can not only help Chinese firms obtain advanced technology and international distribution networks to improve their competitiveness, but also can benefit German companies with market access in China and expand their market share," he said.

Germany Trade & Invest, the European powerhouse's economic development agency, said in a report last month that China was the country's largest greenfield investor in 2014 with 190 projects.

China's own appeal as an investment destination has been declining in recent years owing to rising labour and land costs, competition from Southeast Asian countries such as Vietnam, and concerns over official investigations.

At the same time China has been actively acquiring foreign assets, particularly energy and resources, to power its economy, with firms encouraged to make overseas acquisitions to gain market access and international experience.