Asia Economy

China's January-February FDI at $17.5 Billion, Down 1.35%

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China's foreign direct investment inflows fell 1.35 percent in the first two months of 2013 from a year earlier, extending a run of falls triggered by a drop in investor confidence in emerging markets as global economic growth has slipped.

The Commerce Ministry said on Tuesday that China drew $17.5 billion in foreign direct investment in January and February combined.

February's inflow alone was $8.2 billion, the smallest monthly inflow for seven months, albeit up 6.32 percent from a year earlier.

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FDI is an important gauge of the health of the external economy, to which China's vast factory sector is oriented, but it is a small contributor to overall capital flows compared with exports, which were worth about $2 trillion in 2012.

The FDI figure followed February's strong export growth data which suggests to some economists that China remains on track for a modest recovery and a sign that global demand for goods produced in the country's vast - and substantially foreign-funded - factory sector may also be on the mend.

A new government led by incoming President Xi Jinping has investors hoping that Beijing will pursue delayed reforms, including relaxing capital account controls, to drive China into the next stage of growth.

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The Commerce Ministry data also showed investment inflows from the European Union rose 34.0 percent in the first two months from a year ago to $1.2 billion, while investment by U.S. firms fell 5.4 percent during the same period to $497 million.

FDI from 10 top Asian economies, including Hong Kong, Japan and Singapore, fell 1.3 percent year on year in the first two months, to $15.2 billion, the ministry said.

Service sector inflows were $8.4 billion between January and February, up 5.5 percent on a year ago.

Manufacturing sector inflows totaled $7.5 billion in the first two months, down 10.6 percent versus a year earlier.

China's outbound direct investment from non-financial firms in the first two months totaled $18.4 billion, up 147.3 percent from a year ago, the Commerce Ministry added.

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China attracted a total of $111.7 billion in FDI in 2012, just shy of 2011's record $116 billion and marking the first annual fall in three years.

Beijing has said it wants to bring in $120 billion worth of FDI each year between 2012 and 2015.

China joined the World Trade Organization in November 2001 and FDI inflows have soared since. OECD data shows China rivals the United States as the world's top FDI destination.