By Bloomberg News
July 15 (Bloomberg) -- Foreign direct investment in China fell for a ninth month from a year earlier as companies pared spending to weather the global financial crisis.
Investment slid 6.8 percent in June to $8.96 billion, the commerce ministry said at a briefing in Beijing today. The pace of the decline slowed from 17.8 percent in May and 17.9 percent in the first six months.
The detention of Rio Tinto Group staff this month for the alleged theft of state secrets could make some companies more wary of investing in China. Concerns may be offset by signs that the world’s third-biggest economy is rebounding on record lending and a 4 trillion yuan ($585 billion) stimulus package.
“Foreign capital inflows were bound to slow because of the uncertain economic outlook and global credit crunch,” said Darius Kowalczyk, chief investment strategist at SJS Markets Ltd. in Hong Kong. “China is recovering faster than anyone expected.”
China’s economy may have expanded 7.8 percent in the second quarter, rebounding from the weakest growth in almost a decade, according to a Bloomberg News survey of economists. The figure will be announced tomorrow. First-quarter growth was 6.1 percent.
Foreign companies are seeking opportunities from stimulus spending on power grids, infrastructure, welfare homes, railways and subsidies for farmers to buy home appliances.
China’s government is studying policies to lure direct investment as the nation faces “unprecedented difficulties” in attracting funds, Vice Commerce Minister Chen Jian said on July 2. He didn’t elaborate or give a timetable for the new policies.
Foreign-invested businesses account for 30 percent of industrial output, 55 percent of trade and 11 percent of urban jobs, according to the commerce ministry.
--Li Yanping, Kevin Hamlin. Editors:
To contact Bloomberg News staff for this story: Li Yanping in Beijing at +86-10-6649-7568 or yli16@bloomberg.net
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