China's FDI inflow drop continues but less sharply

BEIJING-- Foreign direct investment into China dropped 0.24 percent year-on-year in October to $8.31 billion, according to the Ministry of Commerce on Tuesday.

The drop was less sharp than compared to September, when FDI into China dropped 6.8 percent year-on-year to $8.43 billion.

However, it is the fifth consecutive monthly drop in the country's FDI inflow. The figure brought the total FDI inflow for the first 10 months of 2012 to $91.74 billion, down 3.45 percent year-on-year,ministry spokesman Shen Danyang said.

In the first 10 months, investment from the United States reversed a trend of decline and rose 5.3 percent year-on-year to $2.7 billion. Investment from Japan surged 10.9 percent from a year earlier to $6.08 billion, Shen said.

Investment from the EU dropped 5 percent year-on-year to $5.24 billion.

All three markets showed improvements compared to the first nine months.

Shen said that investment in the service and high-tech industries rose significantly and the structure of FDI had improved.

FDI into the service industry, excluding the real estate sector, rose 2.1 percent year on year in the first ten months, he said.

Foreign investment in the real estate sector dropped 6.14 percent year-on-year amid the country's efforts to rein in property prices.

China's central regions saw FDI inflow surge 19.4 percent year on year in the first ten months. Investment in the western regions rose 6.8 percent, while in the eastern regions it dropped by 6.1 percent.

"Generally speaking, we are confident that China will remain attractive in the eyes of foreign investors though there is a period of adjustment," Shen said.

The country approved the establishment of 20,021 new foreign-funded companies in the first ten months, down 10.5 percent from a year ago, Shen said.

Outbound direct investment in non-financial sectors surged 25.8 percent year-on-year to $58.17 billion during the first 10 months.

The increase was slower than the 28.9-percent expansion seen in the January-September period, as the country's economy slowed due to flagging property investment and exports.

The FDI data came after the release of other economic indicators for October showed some stabilizing signs.

Industrial added-value output growth accelerated to 9.6 percent year-on-year in October, from 9.2 percent in September and 8.6 percent in August. Retail sales of consumer goods rose 14.5 percent from a year ago in October, compared with 14.1 percent in September and 13.2 percent in August.

Latest customs data showed China's exports in October posted the strongest monthly growth since May but imports remained weak.

Exports rose 11.6 percent from one year earlier in October while imports climbed 2.4 percent year-on-year last month, unchanged from the growth in September.

The country's consumer price index, a main gauge of inflation, dropped to a 33-month low of 1.7 percent last month.