Overseas investment in China dropped in August to its lowest in four years as foreign companies respond to a slowing mainland economy and an increasingly fragile global outlook.
Foreign direct investment (FDI) fell 14.0 percent in August from a year earlier after skidding 16.9 percent in July, according to the China's Ministry of Commerce. Taken together it was the largest decrease in new involvement in the Chinese economy since July 2009. Analysts in the Bloomberg survey had forecast a 0.8 percent expansion.
Indications have been accruing, including weakness in industrial production, the commercial and home real estate market, manufacturing, electricity usage and fixed-asset investment , that the that the Chinese economy has receded from its 7.5 percent annual growth rate in the second quarter, a figure which many economists consider overstated in the first place.
Industrial production in August expanded just 6.9 percent year on year, its slowest pace since 5.7 percent in December 2008 at the height of the financial crisis.
Foreign investment in the Beijing economy trends to be quite volatile. China drew $7.2 billion in FDI in August, the lowest monthly amount since July 2010, though ithad attracted the largest amount in records that go back to 1997, $14.42 billion, just two months prior in June. July's incoming investment was $7.81 billion.
Another factor in the paucity of foreign investment may be the antitrust investigation of over 30 foreign companies by the Chinese regulators. Qualcomm and Microsoft, to name two, have said they are cooperating with authorities.
Shen Danyang, a spokesman for the Commerce Ministry, as quoted in the Wall Street Journal, said onTuesday that China doesn't discriminate against foreign companies. "Complaints about China's targeting foreign firms to help domestic firms are not true," he said. "China's antitrust probes are all for the purpose of creating a better business environment and absolutely not targeting certain types of firms."
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