Foreign Direct Investment in China Jumps 29% in July

Foreign direct investment (FDI) in China for July surged by 29% on year to $6.92 bil., said the Ministry of Commerce Tuesday.

This was the 12th consecutive monthly gain and the fourth month this year in which the figure was above 20%. It was also the second highest FDI growth for the year and showed that foreign businesses continued to have a high degree of confidence in China’s economy despite recent fears of a slowdown.

The service sector and the western and northeastern regions were the biggest beneficiaries of foreign investments. During the first seven months retail sales jumped 18.2% year-on-year to 8.5 trillion yuan ($1.25 trillion). Another factor in the high FDI growth was the “low reference point”, said Li Xiaogang, director of Foreign Investment Research Center at the Shanghai Academy of Social Sciences. July 2009 had been a low month in which China’s FDI had fallen 35.7% to $5.36 billion.

The likely rise of the yuan in the near future was cited as another inducement for the FDI growth. Among the top investing nations were Singapore, Japan, South Korea, the United States and Germany, according to the Ministry of Commerce.

From January to July, the service sector outstripped other sectors in FDI growth, at 37.6%, compared with only 4.58% in manufacturing. Western China and the northeast logged FDI growth of 19% 63% respectively.

The investment hasn’t been one way. In July China’s direct investment in other countries hit $8.91 billion, the highest of this year.

Globally China was second only to the U.S. in receiving FDI in 2009. The standings are likely to be the same this year, predicted the United Nations Conference on Trade and Development.

BEIJING