FDI into China falls for first time in two years

Foreign direct investment into China fell in November for the first time in 28 months, Reuters reported. Investors committed US$8.8 billion to the country last month, down 9.8% year-on-year. It is the first decline since July 2009, when FDI fell 35.7%. The drop in capital from the US was especially pronounced, where growth decreased 23.1% in the first 11 months of the year, compared to the same period in 2010. Weak FDI may be a result of companies cutting back due to economic turmoil abroad or China’s rising labor wages making low-end manufacturing uncompetitive. By contrast, investment from the EU was up 0.29%. “The Chinese market is too big to be neglected for most foreign companies,” said Hua Zhongwei, an economist at Huachuang Securities. “Once the dust settles, foreign investment flows into China are expected to rise steadily again.”