January foreign investment in China dips 7.3%, extends fall

BEIJING (REUTERS) - China's foreign direct investment (FDI) inflows fell 7.3 per cent last month from a year earlier, extending last year's series of consecutive year-on-year declines and highlighting still sluggish global economic conditions.

The Commerce Ministry said on Wednesday that China drew US$9.27 billion (S$11.49 billion) in FDI last month, down from December's US$11.7 billion. Investment inflows from key Asian economies and the United States were down in the latest period.

FDI is an important gauge of the external economy to which China's vast factory sector is oriented, though it is a small contributor to China's overall capital inflows compared with exports, which were worth about US$2 trillion last year.

The FDI data followed stronger-than-expected trade figures, which pointed to a solid recovery in domestic and external demand that signals the world's second-largest economy is gaining momentum after growth last year eased to a 13-year low, albeit at a 7.8 per cent clip that is the envy of the world's major economies.

A report earlier on Wednesday from ratings agency Moody's said China's economy was on track to deliver growth of 7.5 per cent to 8.5 per cent this year, with relatively easy monetary conditions and targeted fiscal spending likely to sustain the recovery.

"The favourable growth outlook is supported by policy easing and credit extension, particularly by the non-banking sectors, and should continue in 2014," Moody's said.

China attracted a total of US$111.7 billion in FDI last year, just shy of 2011's record US$116 billion and marking the first annual fall in three years. Beijing has said it wants to bring in US$120 billion worth of FDI each year between 2012 and 2015.

China joined the World Trade Organisation in November 2001, and FDI inflows have soared since. OECD data shows China rivals the US as the world's top FDI destination.

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