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FDI warms up as spending kicks in

(Xinhua)
Updated: 2009-04-15 22:16

BEIJING - Foreign investment activities dampened by the world financial crisis seemed to show signs of warming up in China as the decline of foreign direct investment (FDI) continued to slow in March.

Statistics released by the Ministry of Commerce (MOC) on Wednesday showed the FDI dropped for the sixth consecutive month in March to US$8.4 billion, down 9.5 percent from a year earlier.

Related readings:  FDI in China declines 20.6% in Q1  FDI decline slows in March  FDI drops 15%, declines forecast for next few months

Although the figure continues to fall, it shows an improvement from the 15.81 percent drop in February and 32.67 percent drop in January.

"Foreign investment actually climbed 44 percent in March from US$5.8 billion a month earlier. The month-on-month increase shows a recovering investor's confidence toward an economy stimulated through governmental efforts," Zhang Hanya, director of Research Institute of Investment, National Development and Reform Commission, told Xinhua.

Governmental pull

Alarmed by the sharp decline in FDI -- a contributor of the country's foreign reserve -- China has issued a series of measures to tackle the fall beginning in November.

The latest step came in March when the MOC decided to give its local branches more power on approving foreign-funded projects.

Local officials are allowed to approve the establishment of foreign-funded companies with a registered capital of US$100 million or less.

Other measures helping attract or maintain foreign investment included non-stop governmental efforts to rescue the falling export through eight tax rebates so far and stimulus package to enhance domestic demand.

"We welcome foreign companies to invest in China as always, and will create a good business environment for foreign companies in the country," said commerce minister Chen Deming when meeting entrepreneurs from Europe and the United States at the end of March.

Echoing central government's move, provincial authorities, especially those in provinces more exposed to changes in overseas markets, began to step up efforts to attract foreign investors.

In southern Guangdong Province, whose foreign-funded companies contributed 57 percent of the region's total industrial output in 2008, local government announced measures to encourage foreign investments, such as ensuring land use and simplifying the procedure for approval on foreign-funded projects.

"More efforts will be paid to enhance capital inflow from developed countries and regions, especially those from top-500 multinational companies in the world, to build regional headquarters, research and development centers, purchasing centers and training bases in Guangdong," the province's vice governor Wan Qingliang said at a meeting addressing FDI decline on April 3.

Data from local bureau of statistics showed foreign investment contracts in Guangdong amounted to US$1.6 billion in the first two months this year, down 69.5 percent year on year.

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