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China’s FDI drop of 3.7% extends downward trend

June 16,2017

   
   

FOREIGN direct investment on the Chinese mainland dropped 3.7 percent year on year in May to 54.67 billion yuan (US$8.05 billion), extending a downward trend, data from the Ministry of Commerce showed yesterday.

The decline followed a mild retreat in the previous month, when FDI was 4.3 percent lower than last April, in contrast with a 6.7-percent increase in March.

In the first five months, FDI inflow shed 0.7 percent from the same period in 2016 to 341.08 billion yuan, while 12,159 new foreign-funded enterprises were set up on the mainland, up 11.9 percent, according to the ministry.

Despite a drop in the overall FDI, foreign investment in the mainland’s service sector, especially high-tech and modern service industries, continued to grow steadily.

In the first five months, the high-tech service sector attracted 48.64 billion yuan of foreign capital, up 20.5 percent year on year, according to the ministry.

Meanwhile, for the manufacturing sector, FDI in communication equipment manufacturing jumped 46.6 percent in the five-month period.

Investment from Hong Kong, Taiwan and the European Union grew 12.7 percent, 41.8 percent and 6.2 percent in the January-May period, respectively.

The ministry said a number of policies will soon be introduced to further open up the market and improve the investment environment, including a revised guidance catalog for foreign investors to relax restrictions on foreign ownership in more industries such as new energy vehicle batteries.

The government is moving quickly to lower threshold for foreign investors by making more industries accessible to foreign investment and simplifying approval procedures for foreign companies.

Today, more than 95 percent of new foreign enterprises on the mainland do not require government approval before they are set up.