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UPDATE 2-China Jan foreign direct investment rises in sign of confidence
February 18, 2014 / 3:00 AM / 4 years ago

UPDATE 2-China Jan foreign direct investment rises in sign of confidence

* Jan FDI up 16.1 pct y/y to $10.76 bln
    * Commerce Ministry says FDI to remain strong in 2014
    * FDI inflows into China rose 5.3 pct in 2013 to $117.6 bln
    * Jan China outbound FDI $7.23 bln, up 47.2 percent y/y

    BEIJING, Feb 18 (Reuters) - China drew $10.76 billion in
foreign direct investment (FDI) in January, up 16.1 percent from
a year earlier, the Commerce Ministry said on Tuesday, a sign
that confidence in the world's second-largest economy remains
firm even as growth cools.
    The majority of the new investment, some $6.33 billion, went
into China's services industry, while investment in
manufacturing fell 21.7 percent, the ministry said.
    Ministry spokesman Shen Danyang told a media briefing that
China's economic reforms and opening up of the services sector,
helped boost confidence of foreign investors.
    "The double-digit growth in FDI in January answered the
question of whether China's investment environment remains
favourable," Shen said.
    "We expect foreign direct investment to maintain sound
momentum this year." 
    China has shifted its focus on attracting FDI inflows to
high-end manufacturing, a modern services sector and energy
saving and environmental industries, Shen said.
    FDI in China's distribution services sector rose 7.4 percent
in January from a year earlier, while FDI in the
telecommunications equipment and computer sector rose 9.2
percent and that in the transportation equipment sector tumbled
62 percent.
    China has attracted a steady flow of foreign investment
every year since joining the World Trade Organization in 2001,
as businesses jumped at the chance to enter the world's most
populous country.
    FDI inflows into China in 2013 rose to a record $117.6
    In January, investment from 10 Asian countries and regions,
including Hong Kong, Taiwan, Japan and South Korea, rose 22.2
percent to $9.55 billion. Investment from the United States rose
34.9 percent to $369 million while that from the European Union
fell 41.3 percent to $482 million.
    The investment comes even as China's economy show signs of
slowing from the stellar growth rates of years past as the
government looks to shift the emphasis to structural reform
rather than growth for its own sake. 
    One pillar of the reform drive is to make the economy driven
more by the service sector and consumers, ending its traditional
reliance on investment and exports for growth.  
    At the same time, the ministry's data showed more Chinese
companies are expanding abroad. Outbound FDI in January was
$7.23 billion, up 47.2 percent from a year earlier.
    The rise in outbound FDI in January was led by a 500 percent
jump in investment in Japan, the ministry said without
    Chinese firms have been quickening the pace of overseas
purchases in recent years, with their footprint expanding from
Asia to Africa and Europe.
    In January alone, computer maker Lenovo Group 
spent over $5 billion on two high-profile acquisitions in the
United States.
    Ministry spokesman Shen also played down the impact of fake
export deals in China's strong trade performance in January,
which he attributed to a recovery in developed economies and
favourable policies.
    "Some individual analysts believe that the rapid export
growth was driven by falsified deals. We think that's just a
guess, which is unfounded," he said.  
    The value of China's exports climbed 10.6 percent in January
from a year earlier, more than five times market forecasts for a
2 percent rise. Some market watchers suspected the figures were
inflated by fake trade deals which firms used to sneak cash into
the country past capital controls. 
    China's total trade grew 7.6 percent in 2013, below the
official target of 8 percent.
    The Commerce Ministry has pledged to maintain steady trade
growth in 2014 and further balance its trade structure by
increasing imports of raw materials and energy products.

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