Foreign direct investment in China fell 36.52% in November to US$5.32 billion, the South China Morning Post reported. The year-on-year contraction pushed foreign investment growth down to 26.29% in the first 11 months of the year, down from 35.06% growth in the first 10 months. The slowdown is being blamed on the global credit crunch, a slower domestic economy and expectations that the renminbi could depreciate. Earlier, strong stock and property markets and expectations of a rising currency had attracted inflows of hot capital, pushing China’s foreign reserves to US$1.91 trillion by the end of September. Some economists have now warned that massive capital outflows could put additional pressure on the Chinese economy as inflationary fears are replaced by concerns about deflation. Producer-price inflation fell to 2.0% in November, from 6.6% in October.
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