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Thursday, 17 October 2013 | MYT 4:42 PM

Foreign investment in China up 6.2% in first 9 months

BEIJING: Foreign investment in China rose 6.2% on year in the first nine months of 2013, the government said Thursday, but warned that the world's No 2 economy still faced domestic and external headwinds.

And while the commerce ministry said Chinese investment overseas had increased sharply over the first nine months of the year, the amount of cash going to Japan had almost halved as a diplomatic row with Tokyo drags on.

Beijing said Foreign Direct Investment (FDI), which excludes financial sectors, reached US$88.6bil for January-September.

For September alone FDI climbed 4.9% to US$8.84bil, well up from the 0.62% rise seen in August. But the figure is sharply down from 24.13% seen in July and 20.12% in June.

Ministry spokesman Shen Danyang said the size of full-year FDI was expected to be "stable", but noted that uncertainties remained.

"Given the complex and changing global economic situation, the sustained and stable growth of the Chinese economy is facing pressure and challenges such as insufficient foreign demand and rising labour costs," Shen told a news conference.

"These will affect to some extent China's foreign investment environment," he said.

The amount of money coming from the European Union rose 23% year-on-year to US$5.94bil during the January-September period, while from the United States it increased 21.3% to US$2.88bil.

The vast majority, however, comes from a group of 10 Asian countries and regions including Hong Kong, Taiwan, Japan, Thailand and Singapore. FDI from the region jumped 7.5% to US$76.3bil in January-September.

"Investment from the 10 Asian countries and regions, the EU and the US maintained rather fast growth," the commerce ministry said.

Separately, Chinese investment abroad rose 17.4% year-on-year to US$61.64bil during the nine months, the ministry said.

However, the amount of cash going to Japan slumped 45.5%. The plunge comes as the two countries are embroiled in a sovereignty dispute over islands they both claim in the East China Sea – known as Diaoyu in China and Senkaku in Japan.

The long-simmering tensions boiled over in September last year, when Tokyo nationalised the islands, sparking a bitter diplomatic stand-off.

Despite the row, Japanese investment in China during the first nine months rose 5.62% to US$5.94bil.

After data last weekend showed a surprise fall in September exports Shen added that China's trade "is still facing a severe and complicated external environment".

He singled out sharply slowing growth in emerging markets that has dampened demand for Chinese goods.

But the government is still confident that trade will maintain "stable development" and expects exports to see marginal growth in the next two months, thanks to supportive policies and an improving domestic economy, Shen said.

China has set an 8% target for foreign trade growth this year.

Beijing is due to announce third-quarter economic growth figures on Friday, with economists surveyed by AFP predicting growth of 7.8%, which would mark an acceleration from the 7.5% recorded in April-June – AFP.

Tags / Keywords: Economy , Foreign News

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