BEIJING (Reuters) - Foreign direct investment (FDI) into China climbed nearly 16 percent in the first 10 months of 2011 from a year earlier as foreign investors continued to flock to the world’s fastest-growing major economy despite the global economic malaise.
China drew $95 billion in FDI in the first 10 months of this year, up 15.9 percent from the same period in 2010, the Commerce Ministry said on Wednesday, putting it on track for another record year of FDI inflows.
Growth slowed slightly from a 17 percent rise in the fist nine months, dragged by sluggish inflows from the United States and Europe, the ministry said.
In October alone, China attracted $8.3 billion in FDI, up 8.75 percent from a year ago, the ministry said.
Investment inflows, which surged in the years after China joined the World Trade Organization in 2001, have recovered strongly after being hit hard by the global economic slowdown.
FDI from 10 major Asian countries and regions soared 20.7 percent in January-October from the same period a year earlier, with inflows from Japan jumping 65.5 percent, it said.
FDI from the United States dipped 18.1 percent in the first 10 months year-on-year while inflows from the European Union inched up 1.1 percent, underscoring their economic woes.
Firms invested $44.5 billion in the services sector, up 20.7 percent from a year earlier. The manufacturing sector drew $43.6 billion in funds, but the annual growth rate was a more moderate 11.7 percent.
Meanwhile, China’s outbound investment rose 14.1 percent in the first 10 months from a year earlier to $46.3 billion, including $15.6 billion via mergers and acquisitions in overseas markets, the ministry said.
China has been encouraging its companies to invest overseas to shore up their competitiveness and help relieve the upward pressure on the yuan from hefty capital inflows.
The ministry also cautioned that China’s export outlook could be grim for the rest of this year and the early part of next year as Europe struggles to contain its sovereign debt crisis and the United States seeks to spur its fragile recovery.
“China’s export outlook in the near future is not very optimistic,” Shen Danyang, the ministry’s spokesman told a news conference.
Shen shrugged off foreign criticism, particularly from the United States, that China keeps the yuan undervalued, giving the country a persistent trade advantage, saying such accusations was “groundless and unreasonable.”
“Currently, China’s yuan exchange rate is basically at a reasonable level and range,” he said.
U.S. President Barack Obama served notice on Sunday in Honolulu that the United States was fed up with China’s trade and currency practices as he turned up the heat on America’s biggest economic rival.
He said the undervalued yuan gives Chinese products a 20-25 percent price advantage in global markets.
But Chinese President Hu Jintao insisted U.S. trade and employment problems would not be solved by even a major appreciation of China’s yuan versus the dollar.
China’s exports grew 15.9 percent in October from a year earlier, their most sluggish expansion in eight months. After stripping out the traditionally volatile month of February, October’s growth was the slowest since November 2009.
Imports jumped 28.7 percent in October, suggesting efforts to tilt the economy toward domestic demand may be offsetting the external weakness that has dragged on economic growth this year. That helped limit October’s trade surplus to $17 billion.
Reporting by Langi Chiang, Kevin Yao; Editing by Nick Edwards and Jonathan Hopfner