FDI surge a show of confidence

Outbound investment jumps sharply as country facilitates global business

Foreign direct investment in China continued to increase in March, an indication of global confidence in the world's second-largest economy, officials said.

Inbound FDI increased 5.65 percent last month from a year earlier to $12.4 billion, the Ministry of Commerce said on Thursday.

Shen Danyang, a spokesman for the ministry, predicted steady growth in FDI in the coming months as a result of China's efforts to optimize its foreign investment structure.

March saw the second consecutive month of growth for China's FDI. In February, it rose 6.3 percent, the first gain after an eight-month slump.

Shen attributed the increase to China's "timely adjustment of macroeconomic policy, and improving advantages as a foreign investment destination".

For the entire first quarter, the nation's inbound investment gained 1.4 percent year-on-year to $29.9 billion, the ministry said.

China's outbound direct investment in the non-financial sector in the first quarter saw strong growth, gaining 44 percent to $23.8 billion, it said.

The European Union boosted its investment in China by 45 percent to $2.05 billion in the first quarter. FDI from the US and Japan increased by 18.5 percent and 10.5 percent to $1.06 billion and $2.29 billion.

The boost in FDI came despite a deceleration in China's economic growth to 7.7 percent in the first three months of this year, down from 7.9 percent in the final quarter of 2012.

The growth showed global companies' confidence in China, a top researcher said.

"The Chinese government, newly elected by the National People's Congress in March, recently sent a positive signal to foreign companies in which they were welcomed to play a key role, rather than a marginal role, in China's next stage of development and reform," said Huo Jianguo, president of the Chinese Academy of International Trade and Economic Cooperation.

During a recent meeting with executives from a host of multinationals attending the China Development Forum, Premier Li Keqiang pointed out that China will expand domestic consumption by opening up further to foreign businesses.

Li promised further opening-up in services and industries related to new energy, emphasizing that the government will ensure foreign businesses fair access to the market and a level playing field in terms of competition.

As part of the transformation of the nation's economic growth model, China launched a new version of its guidelines for foreign industrial investment in late 2011, encouraging foreign companies to add investment in high-end manufacturing, service and high-tech.

Shen said the country is on track. During the first quarter, foreign investment flowing into China's telecom, computer and other electronic equipment manufacturing gained 12.1 percent, and transportation equipment manufacturing saw a gain of 29.3 percent.

"We encourage foreign companies to invest in high-end manufacturing ... services are also encouraged," Shen said, citing that foreign investment in distribution services surged 32.8 percent and in transportation service by 57.3 percent.

China is the second-largest nation in terms of FDI, behind the US. In 2012, China's FDI hit a record high of $111.7 billion.

The National Development and Reform Commission, the nation's major economic policymaker, said in March that FDI may rise about 1.2 percent to $113 billion this year.

During the first quarter, China's outbound direct investment grew by 44 percent to $23.8 billion. China's ODI in the US and ASEAN led the growth, gaining 104 and 99 percent.

The nation's ODI in the non-financial sector in 2012 surged by up to 30 percent from a year earlier to $77.2 billion, while global ODI dropped by 18.3 percent year-on-year.

The NDRC said in its annual report to the legislature that outbound investment was projected to increase 15 percent to $88.7 billion this year.