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China's FDI drops by 5.8% in December

January 20, 2016 16:18 IST

DollarsAmid a slowdown, China on Wednesday said FDI into the country slipped 5.8 per cent year on year in December 2015, its first yearly drop since August 2014.

Official data showed that China received $126.27 billion last year registering a 6.4 per cent increase.

Foreign direct investment in December reached 77.02 billion yuan ($12.2), Ministry of Commerce spokesperson Shen Danyang told a press conference.

He attributed the decline to a higher base in the same month of 2014 as well as changing currency trends and market conditions, without elaborating.

The Chinese currency, yuan, has been weakening since China's central bank revamped the foreign exchange mechanism in August 2015, saying it was making the rate more market-based.

The weakening yuan was influenced by the start of a new rate-hike cycle in the US and a slower Chinese economy.            

Despite the FDI decline in December, Shen said the total foreign direct investment for the whole year of 2015 rose 6.4 per cent from 2014 to $126.27 billion.

China's FDI growth saw ups and downs in the first 11 months of 2015.

It accelerated to 22 per cent in August before winding down to 1.9 per cent in November.

In December, more than 2,000 foreign-funded enterprises were newly established in the mainland, up 17.9 per cent year on year, Shen said.

He said China Out Bound Investment for 2015 hit an all time high of $118 billion, with investment in ASEAN member countries and the United States soaring more than 60 per cent year on year.

Direct investment in 49 countries along the Belt and Road route rose 18.2 per cent in 2015, accounting for 12.6 per cent of the total.

ODI rose 6.1 per cent year on year in December, slowing from a 12.6 per cent increase in November, he said.

China brought in 86.5 billion yuan ($13.89 billion) of ODI in December, Shen said.

Despite the global economic downturn, Chinese companies remained active in overseas mergers and acquisitions last year, which have become a key mode of overseas investment, he added.

Chinese firms carried out 593 M&A deals worth $40.1 billion in 2015, Shen said.

He cited the purchase of a nearly 60-per cent stake in Italian tire maker Pirelli by China National Tire & Rubber Co. Ltd. as the biggest outbound acquisition by a Chinese firm in 2015.

Last year, China signed $210 billion of contracted projects overseas, up 9.5 per cent year on year, with 44 per cent of the deals inked with 60 countries along the Belt and Road route, Shen said.

 

K J M Varma in Beijing
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