Outbound investment jumps sharply as country facilitates global business

Foreign direct investment in China continued to increase in March, an indication of global confidence in the world´s second-largest economy, officials said.

Inbound FDI increased 5.65 percent last month from a year earlier to $12.4 billion, the Ministry of Commerce said on Thursday.

Shen Danyang, a spokesman for the ministry, predicted steady growth in FDI in the coming months as a result of China´s efforts to optimize its foreign investment structure.

March saw the second consecutive month of growth for China´s FDI. In February, it rose 6.3 percent, the first gain after an eight-month slump.

Shen attributed the increase to China´s "timely adjustment of macroeconomic policy, and improving advantages as a foreign investment destination".

For the entire first quarter, the nation´s inbound investment gained 1.4 percent year-on-year to $29.9 billion, the ministry said.

China´s outbound direct investment in the non-financial sector in the first quarter saw strong growth, gaining 44 percent to $23.8 billion, it said.

The European Union boosted its investment in China by 45 percent to $2.05 billion in the first quarter. FDI from the US and Japan increased by 18.5 percent and 10.5 percent to $1.06 billion and $2.29 billion.

The boost in FDI came despite a deceleration in China´s economic growth to 7.7 percent in the first three months of this year, down from 7.9 percent in the final quarter of 2012.

The growth showed global companies´ confidence in China, a top researcher said.

"The Chinese government, newly elected by the National People´s Congress in March, recently sent a positive signal to foreign companies in which they were welcomed to play a key role, rather than a marginal role, in China´s next stage of development and reform," said Huo Jianguo, president of the Chinese Academy of International Trade and Economic Cooperation.

During a recent meeting with executives from a host of multinationals attending the China Development Forum, Premier Li Keqiang pointed out that China will expand domestic consumption by opening up further to foreign businesses.

Li promised further opening-up in services and industries related to new energy, emphasizing that the government will ensure foreign businesses fair access to the market and a level playing field in terms of competition.

As part of the transformation of the nation´s economic growth model, China launched a new version of its guidelines for foreign industrial investment in late 2011, encouraging foreign companies to add investment in high-end manufacturing, service and high-tech.

Shen said the country is on track. During the first quarter, foreign investment flowing into China´s telecom, computer and other electronic equipment manufacturing gained 12.1 percent, and transportation equipment manufacturing saw a gain of 29.3 percent.

"We encourage foreign companies to invest in high-end manufacturing ... services are also encouraged," Shen said, citing that foreign investment in distribution services surged 32.8 percent and in transportation service by 57.3 percent.

China is the second-largest nation in terms of FDI, behind the US. In 2012, China´s FDI hit a record high of $111.7 billion.

The National Development and Reform Commission, the nation´s major economic policymaker, said in March that FDI may rise about 1.2 percent to $113 billion this year.

During the first quarter, China´s outbound direct investment grew by 44 percent to $23.8 billion. China´s ODI in the US and ASEAN led the growth, gaining 104 and 99 percent.

The nation´s ODI in the non-financial sector in 2012 surged by up to 30 percent from a year earlier to $77.2 billion, while global ODI dropped by 18.3 percent year-on-year.

The NDRC said in its annual report to the legislature that outbound investment was projected to increase 15 percent to $88.7 billion this year.

Source: China Daily