Foreign investment drops slightly

Overseas invesment in China's manufacturing sector dropped slightly in 2005, the Wall Street Journal reported. The figure, which discounts a series of one-time deals, is down 0.5% for the first half of this year after a 12% drop in June. Since China's economy is growing at about 10% annually, the proportion of foreign direct investment in the whole economy is shrinking even faster. Total investment is still large at roughly US$60 billion per year but, given China's reputation as a magnet for foreign money, a flattening is surprising. It has been put down to a number of factors: most manufacturing that would move to China has already moved, some lower-end production is migrating to even cheaper locations and barriers to foreign firms are keeping some investment away.