From “China’s Foreign Direct Investment Inflows Surge in February,” by Sumei Tang, economist, Moody’s economy.com, March 18:
Foreign direct investment (FDI) inflows in February advanced 38.3% year-on-year, coming in at US$6.93 billion, following a strong 109.8% surge in January … One noticeable change in China’s FDI inflows during the recent months has been the decline in the number of newly approved foreign funded firms on the mainland, while the average registered capital for all foreign companies has increased. Investment in the manufacturing sector still accounted for the largest share in the country’s total FDI inflows, while foreign capital flowing into service industries such as banking, and wholesale and retail has expanded rapidly because of the newly adjusted FDI policy. However, investment in real estate dropped due to China’s tightening investment policy in the industry, while foreign funds in the steel, cement or electrolyzed aluminium sectors have been restricted since 2005.
From “China Economic Flash” by Minggao Shen, Ken Peng, Joe Lo, Citigroup Global Markets, March 11:
With the inflation rate soaring to an average of 7.9% in Jan-Feb, the government could be under greater pressure to make more efforts to achieve its 4.8% inflation target. We expect the PBOC to (i) raise the base lending rate by 27bps, (ii) increase the reserve requirement ratio and (iii) let the renminbi appreciate to ease imported inflation. The government may also increase controls on prices of some consumer goods and inputs for agricultural production. We expect the inflation rate to moderate from 2Q08. But Chinese firms and their shareholders may be exposed to bigger policy risks if inflation remains high.
From “China: A balanced NPC government work report as we expected “ by Frank FX Gong, Chief Economist, JPMorgan Securities Asia Pacific, March 5:
The fiscal deficit was a modest 0.8% of GDP in 2007, and is expected to narrow further to 0.6% of GDP (US$180 billion). The government planned to increase allocations from the central government budget for general development, with the total central government’s construction investment, including infrastructure, up to US$21 billion. This should help cushion the negative impact on China’s growth should global demand for Chinese products slows down too much. Although overall [fixed-asset investment] growth continued to grow at an elevated pace of 25.8% in 2007, investment growth in infrastructure and public utilities has lagged behind the headline notably. There is abundant room for government to speed up infrastructure investment.