Fall in Inward FDI into China over 2012

23 Feb

Following the lecture on Thursday is an interesting short news report on how inward FDI into China has been decreasing over 2012 into 2013. The report highlights how there has been a monthly drop in inward FDI with an overall drop in 2012 from 2011 of 3.7%. During 2011 FDI into China was 116 billion US dollars however this fell in 2012 to 111.7 billion US dollars and was the first fall in FDI since the global economic crisis in 2009. This fall in FDI has mainly been attributed to decreased investment from Europe and Asia and is suspected to be a response to increased property prices and labour costs within China leading to investors looking elsewhere.

On the contrary however US investors have been transferring more money into the Chinese economy over the last 12 months with an increase of US FDI by 4.5% from 2011 to 2012, adding up to 3.1 billion US dollars. The fall in overall inward FDI is also heavily contrast with the great increase in outward FDI of non-financial investment overseas which increased by 28.6% during 2012 adding up to over 77 billion US dollars.

Link to the news report: http://www.youtube.com/watch?v=U3noAuYHxlU

Also a useful link for quick facts about China’s economic and social developments over 2012 http://english.peopledaily.com.cn/90778/8140204.html

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2 Responses to “Fall in Inward FDI into China over 2012”

  1. iyh1g10 February 26, 2013 at 1:12 pm #

    China’s diminished appeal as a destination for foreign investors could be attributed to the rising employee and land costs. Labor-intensive manufacturers are potentially leaving for other Asian countries such as Indonesia, Vietnam and Thailand. In January, HSBC Holdings Plc reported a 3.7 drop in Inbound investment last year as economic expansion was at its weakest since 1999. This is arguably indicative of the rising competitive challenges facing the world’s biggest manufacturer of exports. Dariusz Kowalczyk, senior economist and strategist at Credit Agrcole CIB in Hong Kong suggests that foreign businesses are pulling out based on the assumption that China is not growing as fast as in the past, however he foresees inflows likely to rebound by 4.6 percent this year as businesses realize growth is improving and the nation won’t have a “hard landing,”.

    On another note, on route to produce higher-value exports as a way to solve the issue of a shrinking labour force, China has been investing in industrial machinery and automative industries in Europe.

    Regardless, Beijing remains optimistic in bringing in $120 billion worth of FDI annually between 2012 and 2015, as Commerce Ministry spokesman Shen stated that “the FDI figure is unlikely to see a sharp drop this year, but will remain at a relatively steady level”.

    China’s Foreign Direct Investment Declines for Eight Month. Source: http://www.bloomberg.com/news/2013-02-20/china-s-foreign-direct-investment-declines-for-eighth-month-1-.html

    China January FDI falls, reflects global firms’ caution, cheaper rivals. Source: http://uk.reuters.com/article/2013/02/20/uk-china-economy-fdi-idUKBRE91J04420130220

    Security a factor in FDI from China. Source: http://europe.chinadaily.com.cn/business/2013-02/26/content_16257368.htm

    China Taking Advantage of the European Crisis. Source: http://finance.yahoo.com/news/china-taking-advantage-european-crisis-051458079.html

  2. richard May 6, 2013 at 7:30 pm #

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