China's FDI inflow drops to 1.3 % in October

BEIJING: FDI into China rose 1.3 per cent in October from a year earlier to $8.53 billion, even though the inflow slowed down in recent months and diversified from declining manufacturing sector to service sector in the world's second-largest economy, the government said today.

The rate of growth of Foreign direct investment (FDI) in October was lower than the 1.9 per cent growth in September, after a 14 per cent slump in August, the Chinese Ministry of Commerce (MOC) said today.

For the first 10 months, the FDI, which excludes investment in the financial sector, totaled $95.9 billion, down 1.2 per cent from the same period last year.

The decline is less than the 1.4 per cent fall registered in the first nine months and 1.8 per cent drop posted for the first eight, state-run Xinhua news agency reported.

Among the 10 major investors, FDI from South Korea increased 26.4 per cent year-on-year in the first 10 months while that from Britain expanded 32.4 per cent.

In contrast, investment from Japan plunged 42.9 per cent and that from the United States 23.8 per cent. That of the European Union was also down 16.2 per cent.

MOC spokesman Shen Danyang attributed the declines to restructuring of China's manufacturing industry that used to attract the majority of this kind of investment.

FDI into the manufacturing sector in the January-October period declined 15.1 per cent year-on-year to $32.5 billion while the service sector attracted $53.1 billion, up 6.6 per cent.

Outbound direct investment by non-financial firms rose 17.8 per cent in the first 10 months to $81.9 billion.

China's appeal as an investment destination has waned in recent years due to rising labour and land costs and competition from other Southeast Asian nations like Vietnam.

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