China nets $100 b FDI despite gradual decline

China received FDI of over $100 billion in 2012 for the third successive year despite the investment flow falling during the last few months.

During November, FDI flows into China, the largest recipient of foreign investment through this route, fell for the 10th time in 11 months, as labour costs rose and an economic slowdown dragged growth down for seven quarters in a row.

Meanwhile, the new Chinese leadership continues to scout for more foreign investment to halt the sliding economic growth, which is expected to barely achieve the 7.5 per cent target set for this year.

FDI inflow decreased 5.4 per cent in November from a year earlier, and the pace of drop accelerated from 0.24 per cent in October, Chinese Commerce Ministry spokesman Shen Danyang told a press conference here today. China’s FDI inflow has been declining since June.

But at the same in the first 11 months of 2012, China attracted a total of $100.02 billion, which is the third successive year for it to get over $100 billion even though it was down 3.6 per cent year on year.

FDI from US into China climbed to 6.3 per cent during the January-November period. Also FDI from Japan expanded by 11.3 per cent year-on-year despite problems between China and Japan.

But FDI from the Euro zone fell 2.9 per cent from the previous year, according to the new data.

At the just concluded brainstorming economic conference held by the new leadership of the ruling Communist Party headed by Xi Jinping, plans were drawn up to attract more FDI.

It also focused on ensuring protection of foreign investors’ rights and interests and their intellectual property rights.

China will step up its effort to stabilise FDI inflows while expanding its outbound investment next year, a statement issued last weekend said.

From 1979 to 2008, China attracted FDI totalling $853 billion. In 2010, the FDI inflows surpassed $100 billion for the first time followed by $116 billion of FDI last year. China’s Commerce Ministry aims to attract an average of $120 billion in each subsequent year till 2015.

The FDI inflows are reported to have created 45 million jobs till 2010 in China, according to Ogilvy and Mather.

As per World Bank data, an estimated 200 million Chinese jobs were either created in the export sector or supported directly by foreign investment, making FDI an important factor for China’s factory sector.