Bloomberg News

China’s Foreign Investment Rises for Second Straight Month

April 17, 2013

China’s foreign direct investment rose for a second month in March, a sign of confidence in the world’s second-biggest economy amid last quarter’s unexpected growth slowdown.

Inbound investment gained 5.7 percent from a year earlier to $12.4 billion, the Ministry of Commerce said in a statement today in Beijing. Non-financial outbound investment in the first quarter increased 44 percent to $23.8 billion.

The higher spending by foreign companies follows an eight- month slump, an indication of rising optimism that China will provide them with revenue and profits even as expansion lags the pace of the previous decade. New Premier Li Keqiang said last month that the nation needs 7.5 percent annual growth to meet its goals for the rest of the decade.

“The government may speed up the approval of foreign- funded projects,” Steve Wang, Hong Kong-based head of China research at Reorient Financial Markets Ltd., a China government- backed investment bank, said before the release. “As Beijing’s new leaders push for reform and emphasize quality in growth, China will be relying increasingly on foreign investors” to bring technology for production, energy efficiency and pollution control, Wang said.

China’s economic growth decelerated in the first three months of 2013 as industrial output and investment slowed, after expansion accelerated in the previous period for the first time in two years. Gross domestic product rose 7.7 percent, marking the fourth straight quarter of below-8 percent expansion, the longest streak in two decades.

Quarter’s Investment

First-quarter inbound investment rose 1.4 percent to $29.9 billion, the ministry said.

The National Development and Reform Commission, the nation’s top economic planning agency, said March 5 that foreign direct investment may rise about 1.2 percent to $113 billion this year. Outbound investment was projected to increase 15 percent to $88.7 billion, the agency said in its annual report to the legislature.

Chinese President Xi Jinping said at a meeting this month with executives from companies including PepsiCo Inc. (PEP:US) and Fortescue Metals Group Ltd. (FMG) that the nation will improve conditions for foreign businesses, according to a government statement.

EcoMotors International, the fuel-efficient engine maker based in Allen Park, Michigan, and backed by billionaires Bill Gates and Vinod Khosla, said April 9 that it will choose China as the location for its first factory, which will be built with more than $200 million from the automotive-parts conglomerate Anhui Zhongding Holding Group Co.

--Zheng Lifei. Editors: Scott Lanman, Nicholas Wadhams

To contact Bloomberg News staff for this story: Zheng Lifei in Beijing at lzheng32@bloomberg.net

To contact the editor responsible for this story: Scott Lanman at slanman@bloomberg.net


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