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FDI fell 35.7% in July
Published on: 2009-08-17
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Aug. 17 (Bloomberg) -- Foreign direct investment in China fell for a tenth straight month in July as companies stalled expansion plans amid the global financial crisis.


Investment
declined 35.7 percent from a year earlier to $5.36 billion, the Commerce Ministry said at a briefing in Beijing today. That compared with a 6.76 percent drop in June.


The situation for foreign direct investment in China remains “severe” even as “positive signs” have emerged in the past two months, Vice Commerce Minister
Fu Ziying said last week. Japan emerged from its worst postwar recession in the second quarter, the Cabinet Office said today in Tokyo, and a Bloomberg survey of users shows confidence in the world economy surged to a 22-month high in August.


“This is a reflection of global overcapacity and the earlier credit squeeze,” said
Ben Simpfendorfer, an economist with Royal Bank of Scotland in Hong Kong. “The monthly data is very volatile.”


The detention of four
Rio Tinto Group staff since July 5 may weigh on business investments in the country, U.S. State Department spokesman Philip J. Crowley said Aug. 13.


The four were formally arrested on charges of trade secrets infringement and bribery, China’s Supreme People’s Procuratorate said Aug. 11, according to a Xinhua report. Australia’s Prime Minister
Kevin Rudd said July 15 that the world was “watching closely” how China handles the case.


‘Still Healthy’


China’s economy will expand 9.4 percent this year, topping the government’s official 8 percent target as a 4 trillion yuan ($585 billion) stimulus and record bank lending spurs growth, Goldman Sachs Group Inc. said last week.


Growth rebounded to 7.9 percent in the second quarter, after slowing to 6.1 percent in the first, the weakest pace in almost a decade.


In Asia, Singapore and Hong Kong emerged from recessions last quarter, as did Germany and France in Europe.


“China’s FDI is still healthy compared to the global slump in investments,” said Commerce Ministry spokesman
Yao Jian at today’s briefing. “We can say that China is one of the most attractive places for investments.”

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