Foreign direct investment in China falls 6.8 pct

BEIJING - Foreign direct investment in China fell in June for the ninth straight month but the decline was less severe than in May, data showed Wednesday, adding to signs of an economic recovery.

Investment in June totaled $9 billion, down 6.8 percent from a year earlier, said Commerce Ministry spokesman Yao Jian at a news conference.

The drop in FDI was an improvement over May's 17.8 percent decline from a year earlier.

However, Yao said, "It indicates that we are still facing very big difficulties attracting foreign investment."

In the six months ending June 30, foreign direct investment in China declined by 17.9 percent from a year earlier to $43 billion.

Sherman Chan, an economist for Moody's Economy.com, said China's investment inflows for the first half of 2009 are still massive.

"China is certainly the favourite investment destination for global investors now," Chan said in a report. "The government-orchestrated economic recovery is well on track."

Yao said recent spy charges against employees of Rio Tinto Ltd., an Australian iron ore supplier, wouldn't affect China's investment environment.

"The confidence of foreign investment in China's legal environment has strengthened during China's 30 years of opening up. This single case won't affect China's trade and capacity of attracting foreign investment at all," Yao said.

China is due to release a second quarter growth figures and other data on Thursday.

Expectations that the data will show the economy reviving have pushed the stock market up to a 13-month high.

Foreign direct investment last year rose 23.6 percent $92.4 billion in 2008 from the previous year, though growth began to weaken toward the end of the year.

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Associated Press researcher Bonnie Cao contributed to this report.

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