China January FDI jumps 29.4%: govt

[BEIJING] Foreign investment into China accelerated in January, government data showed on Monday, with overseas firms pumping more cash into the country's services sector as the manufacturing industry slows.

Inward investment rose 29.4 per cent year-on-year to US$13.9 billion, the biggest increase for four years, the commerce ministry said. It is also marginally up from December's US$13.3 billion.

However, analysts attributed the surge last month to the timing of Chinese New Year, which last year fell on January 31 while this year's holiday starts on February 19.

The data showed foreign firms increasing investments in the services sector as China's manufacturing industry slows.

The services sector drew US$9.2 billion in FDI, an increase of 45.1 per cent from a year earlier, accounting for 66 per cent of the total.

China's manufacturing activity contracted for the first time in more than two years in January, signalling further downward pressure on the world's second-largest economy.

The official Purchasing Managers' Index (PMI) released by the National Bureau of Statistics (NBS) came in at 49.8 last month, down from 50.1 recorded in December.

Shen Danyang, a commerce ministry spokesman, said he expected foreign direct investment (FDI) growth to be stable in 2015.

A drop in the number of Japanese factories was due to normal business adjustments rather than a large-scale pullout, he added.

Relations between the two countries have been icy in recent years, chiefly over territorial disputes.

Outbound direct investment (ODI) rose 40.6 per cent to US$10.2 billion.

China drew a total of US$119.6 billion worth of FDI in 2014, while ODI surged to US$102.9 billion.

Both ODI and FDI exclude financial sectors.

Chinese authorities are in the midst of a wide-ranging probe into monopolistic practices, pricing and other activities of foreign firms.

Investigations have focused on sectors ranging from auto manufacturing and pharmaceuticals to baby milk, fuelling fears Beijing is targeting them, a charge the commerce ministry has repeatedly denied.

China's appeal as an investment destination has also been declining in recent years owing to rising labour and land costs and competition from Southeast Asian countries such as Vietnam.

Officials have also blamed source country factors, such as Washington's drive to move industrial production back to the United States.


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