Times of Oman
Sep 02, 2015 LAST UPDATED AT 03:56 PM GMT
Foreign investment falls sharply in China
November 21, 2012 | 12:00 AM
Nippon Airways, Japan said on November 16 that it will extend capacity cuts on China routes into next month. as Chinese visitors to the country slumped 33 per cent in October. Bloomberg News
 
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Beijing: Foreign direct investment (FDI) in China fell for the eleventh time in 12 months as economic growth cools to a 13-year low and a territorial dispute with Japan harms trade.
Investment dropped 0.2 per cent in October from a year earlier to $8.31 billion, the Ministry of Commerce said in Beijing.

FDI inflows in the first 10 months of the year declined 3.5 per cent to $91.7 billion, compared to a slide of 3.8 per cent in the first nine months. The decline highlights challenges for new Chinese leadership headed by Xi Jinping, who took the reins of the ruling Communist Party last week in a once-a-decade power handover, as officials seek to reverse a growth slowdown.

The world's second-largest economy may expand by 7.7 per cent this year, the weakest pace since 1999, based on the median estimate of analysts. "The economic growth model is changing, and some investors may have to relocate to other countries if they are seeking just low costs," Li Huiyong, chief economist at Shanghai-based SWS Research, a securities researcher and consultant, said before the report.

Tensions from the Japanese government's purchase of disputed islands in the East China Sea have led to protests in China and boycotts by tourists.

Outbound spending
All Nippon Airways, Japan's biggest carrier, said that it will extend capacity cuts on China routes into next month. Chinese visitors to the country slumped 33 per cent in October, according to data from the Japan National Tourism Organisation, while Japanese trips to China may drop as much as 70 per cent until the end of March, said JTB Corporation, Japan's biggest travel agency.

China's non-financial outbound investment in the first 10 months rose 25.8 per cent to $58.2 billion, the ministry said. Inbound investment in the first 10 months of 2011 rose 15.9 per cent.

The Shanghai Composite Index, China's benchmark stock gauge, was little changed at 10:06 a.m. local time. The gauge had declined 16.5 per cent in the year through Monday. Other data are pointing to a growth recovery, with exports rising at the fastest pace in five months and industrial output and retail sales exceeding forecasts.

Economists have scrapped forecasts for any easing of monetary policy in the rest of 2012. Analysts surveyed from November 14  to 19 see China holding its reserve- requirement ratio at 20 per cent through the end of the year, based on the median estimate. That compares with the median forecast for a 0.5 percentage-point cut in last month's survey.

Toyota Motor, Honda Motor and Panasonic reported damage to their operations in China as thousands marched in demonstrations sparked by the purchase of islands known as Diaoyu in China and Senkaku in Japan.


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