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FDI jumps 32% on year earlier
Published on: 2009-12-16
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Dec. 16 (Bloomberg) -- Foreign direct investment in China climbed at the fastest pace in 16 months in November, lured by a strengthening recovery in the world’s third-largest economy.


Investment rose 32 percent from a year earlier to $7.02 billion, the Ministry of Commerce said at a briefing in Beijing today. That compared with a 5.7 percent increase in October. Investment fell 9.9 percent in the first 11 months of the year, the government said.


China’s economy grew the most in a year in the third quarter and the expansion will be 9.3 percent in 2010, according to the median forecast of a Bloomberg News survey of analysts. Fast-growing developing nations will lure funds away from advanced economies for the next 10 to 20 years, according to Thomas Deng, head of China strategy at Goldman Sachs Group Inc. in Hong Kong.


“China’s recovery, and especially the expanding consumer market, will continue to attract foreign investors,” said Xing Ziqiang, an economist at China International Capital Corp. in Beijing. “The Chinese market may be the brightest spot for


The benchmark Shanghai Composite Index fluctuated between gains and losses, falling 0.3 percent as of 2:35 p.m. local time, paring this year’s gain to 79 percent.


Luxury carmaker Bayerische Motoren Werke AG said last month that it will build a new factory worth 5 billion yuan ($732 million) in China to tap an auto market set to overtake the U.S. as the world’s largest.


$7 Billion a Month


Foreign direct investment will grow steadily in the next few months and may stay within the $7 billion to $8 billion monthly range attracted since August, the ministry said.


“China’s long-term growth potential is bringing foreign capital into the country at an accelerating pace in the second half,” said Dariusz Kowalczyk, chief investment strategist at SJS Markets Ltd. in Hong Kong.


Investment inflows have climbed for four months, boding well for private investment in a country that this year has garnered most of its growth from government-linked spending, said Kowalczyk.


“It’s important for policy makers to see that the private sector can pick up the baton at some point,” he said. “The fact that the foreign private sector is recovering and investing quite a lot is definitely positive.”


Developing economies will expand 5.1 percent in 2010 compared with 1.3 percent in advanced nations, according to the International Monetary Fund.


Asian Investment


Investment from the U.S. and European Union tumbled in November while inflows from Japan, Singapore and the countries in the Association of Southeast Asian Nations climbed, said ministry spokesman Yao Jian.


The recovery in foreign investment centers on the coastal provinces of Jiangsu, Guangdong and Liaoning, Yao said, adding that Chongqing also featured. Mergers and acquisitions will account for an increasing proportion of the inflows, Yao added.


China’s gross domestic product will expand 10.5 percent this quarter, helping the government to top its 8 percent target for the year, according to the median estimate of 38 economists. Industrial output grew more than economists estimated last month and exports fell the least in 13 months.

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