By Diao Ying and Li Jiabao (
China Daily)
16:09, October 29, 2012
Employees work at the DHL North Asia hub in Shanghai. The $175 million investment project was put into operation on July 12. European investment so far this year has declined by 6.3 percent year-on-year because of China's slowdown and the eurozone debt crisis. Xiao Yang / for China Daily
China's economic slowdown and the sovereign debt crisis have taken a toll on bilateralinvestment between China and Europe, recent data shows.
Foreign direct investment from the European Union to China declined 6.3 percent year-on-year from January to September to $4.83 billion (3.7 billion euros), according to theChinese Ministry of Commerce. China's outbound investment to Europe also droppedby 30.3 percent over the period, compared with a 35 percent increase to Russia and22.2 percent to Japan.
Foreign direct investment fell for the 10th time in 11 months in September, reaching$8.43 billion, down 6.8 percent year-on-year. This year only May bucked the downwardtrend with a slight gain, according to the ministry. In total, the first nine months sawChina's FDI decline 3.8 percent year-on-year to $83.42 billion.
"Decline is the general picture for FDI in China as rising costs have reduced itsattraction for foreign investors and investment opportunities have shrunk followingrapid rises in FDI over recent decades," says Li Xunlei, deputy general manager andchief economist at Haitong Securities Co Ltd.
According to Xiang Songzuo, chief economist of the Agricultural Bank of China Ltd,slowing economic growth combined with poor global economic conditions have dentedthe enthusiasm of foreign investors.
"China still needs FDI, but investment is more likely to flow to fields such as the Internetand finance and foreign investment guidelines will be subject to further adjustment," hesays.
Xiang adds that slowing FDI inflows will affect China's economic restructuring andshows a lack of optimism among foreign companies about China's economic prospects.
China's GDP growth slowed from 9.7 percent in the first quarter of 2011 to 7.4 percentin the third quarter of this year, dragged down primarily by a decline in investment andexports.
"In the short term, declining FDI will not severely affect China's economic growth. Buteconomic expansion will almost certainly slow in the future," Li says.
"China will maintain relatively fast economic growth and retain a certain attraction interms of FDI. But the challenges will increase from other emerging economies, such asVietnam, India and Indonesia."
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