Chinese FDI falls for first time in 9 years
July 9, 2012 Category Foreign investment, Weekly
Foreign direct investment (FDI) from China fell for the first time in nine years in 2011. According to a report by the United Nations Conference on Trade and Development (UNCTAD), outgoing FDI from China declined 5.4% to USD65.12 billion last year – the first drop since an increase in expansion overseas in 2003. Francis Cheung at brokerage firm CLSA said the data was unsurprising. “Since Greece threatened to break from the euro zone last June, pricing negotiations of any merger and acquisition have become immensely difficult,” Cheung said. “If I were an executive from a corporation in one of those troubled regions, I would also hold off until better times.” Cheung expected China’s FDI outflow to rebound in the next few months as projects restarted amid better external economic conditions. China remained the world’s most favored destination for FDI, with inflows rising 8% to USD124 billion last year, and for the first time investment in services surpassing that of manufacturing. UNCTAD said the amount of capital inflow to the financial sector would rise in the coming years as foreign banks including HSBC and Citigroup expanded their presence in China.
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