China’s H1 foreign investment up 18.4%

BEIJING: Foreign direct investment (FDI) in China soared 18.4% in the first half from a year earlier, the government said yesterday, suggesting confidence in the world's second-largest economy was still strong.

However, the flood of money into the economy comes as Beijing tries to staunch inflation, which is running at a three-year high.

Foreign companies invested US$60.89bil in factories and other projects in China from January to June higher than the US$51.4bil spent in the same period last year commerce ministry spokesman Yao Jian told reporters.

In June alone, China attracted US$12.86bil in foreign direct investment up 2.83% year-on-year and more than the US$9.23bil invested in May, the data showed.

Analysts say robust growth in China and expectations for a stronger currency have attracted a growing number of overseas investors hoping for a better return on their money as the United States and Europe remain in the doldrums.

“In the medium to long term, China will remain the most important host country of foreign direct investment,” Yao said.

Yao said Asia had become the main source of FDI in China first-half investment from 10 Asian economies including Hong Kong, Japan, Malaysia and Singapore soared 23.9% year-on-year to US$52.5bil.

US investment fell 22.3% in the same period to US$1.7bil, Yao said. AFP

He added that this was “normal” because total overseas investment by US and EU companies had fallen.

“China's foreign investment environment did not change much. We are still confident in China's appeal to foreign investment,” he said.

But growing concerns that the credit is helping to fuel inflation have triggered a round of monetary tightening as Beijing tries to rein in soaring consumer costs.

Inflation hit a three-year high of 6.4% in June despite the government hiking interest rates five times since October and curbing the amount of money banks can lend. AFP