China's FDI inflow declines further in January

Foreign direct investment (FDI) inflow into China shrank by 7.3 percent year on year to 9.27 billion U.S. dollars in the first month of 2013, the Ministry of Commerce (MOC) said Wednesday.

The pace of decline quickened from 4.5 percent registered for December. The country's FDI inflow has been declining since June as the global economy falters and China's labor costs increase.

In January, the manufacturing sector, which received the largest share of China's FDI, used a total of 4.43 billion U.S. dollars of overseas investment, down 5.8 percent year on year, MOC data showed.

FDI for the service sector marked a greater decline. The sector used 4.03 billion U.S. dollars of overseas investment in January, down 9.8 percent year on year. Particularly, FDI in the property sector dipped 14 percent year on year, the data indicated.

Although the January FDI figures have dropped, there are some positive signs, MOC spokesman Shen Danyang told a press conference here.

In January, the European Union invested a total of 820 million U.S. dollars in Chinese enterprises, up 81.8 percent from a year ago. A total of 140 new enterprises were founded in China due to EU investment, up 30.8 percent year on year, according to the MOC.

In general, the number of new foreign-invested companies rose 34.3 percent to 1,883 in January.

"Despite so, we can not judge the whole-year trend based on a single month's data. As I mentioned last month, the impetus of FDI's future growth has not vanished and the investment scale is expected to stay stable in 2013." Shen said.

As outside uncertainties remain, the general situation will be grim, he noted, citing UN figures showing the transnational direct investment dwindled 18 percent last year, with that in Asia dropping 9.5 percent.

China remains the second largest FDI destination after the United States, he said.

In contrast to the shrinking FDI, China's Overseas Direct Investment (ODI) increased 12.3 percent year on year to 4.91 billion U.S. dollars in January. The figure excluded the investment in the financial sector.