FDI to China plunges for the fourth month

Foreign direct investment into China fell for a fourth month in a row, falling by 32.6 per cent in January from a year earlier as foreign investors withheld investing due to the global economic downturn.

Commerce ministry spokesman Yao Jian told reporters that the total foreign investment in January was $7.54 billion, down 32.6 per cent from a year earlier.

Even as foreign direct investments into China started to slow in October, last year, the foreign direct investment rose by 23.6 per cent from a year earlier to $92.4 billion and the slide in foreign investments in January was marginally slower than in November, when it recorded a 36.52 per cent decline and a 5.7 per cent decline in December.

Yao Jian also said that the number of new foreign-financed companies set up in January fell by 48.7 per cent from the year-earlier to 1,496.

Foreign direct investment fell 21 per cent globally last year to $1.4 trillion as the economic crisis that battered most companies worldwide, began to unfold because of liquidity crunch and the United Nations Conference on Trade and Development said last month that it will decline further this year.

Although China's FDI increased by 23.6 per cent last year, the percentage started to decrease in size every quarter, with UNCTAD estimating that FDI rose by 3.6 per cent in developing countries.

Last week, the Chinese government said it plans to ease many of the approval rules required by foreign investors and wants to give provincial governments more power to independently sign deals.

In a bid to attract more foreign investments and speed up projects, the plan includes to raise the limit for foreign investments from abroad that require approval of only provincial-level authorities to $43.9 million.

Recession in the US, Europe and Japan has pulled the rug from under China's exports, and for the first time in seven years the galloping Chinese economy saw the year-on-year growth rate of Chinese exports dropping 17.2 per cent as consumers in the West started to reign in spending. (See: Recession pulls rug under China's exports) Falling investment and exports have made 20 million migrant workers lose their jobs in wake of the global crisis that has taken a toll on the country's economy.

The 20-million jobless figure was released after the ministry of agriculture conducted a survey in 150 villages in 15 provinces, before the week-long New Year holiday that began on 25 January.

With a booming economy, boosted by an ever growing export sector, nearly 130 million rural Chinese had left their homes to gain employment in the prosperous manufacturing provinces along the sea coast, which produced many cheap consumer goods from toys, furniture, electronic goods and clothing among others and sold globally.

China's manufacturing sector is nearing a technical recession with nationwide manufacturing activity standing at 41.2 in December compared to a low of 40.9 in November as the global economic slowdown and recession in the US, UK, Japan and many EU countries takes its toll on Chinese manufacturing units and exports (See: Chinese manufacturing sector close to recession)