BEIJING--China's foreign direct investment fell in August to its
lowest level in more than four years, in the latest sign of slowing
growth in China and an increasingly cautious outlook from foreign
business.
While foreign-investment figures tend to fluctuate, the data
released on Tuesday by China's Ministry of Commerce is the third
consecutive monthly decline and dovetails with growing weakness in
industrial production, fixed-asset investment, manufacturing and
the country's real-estate sector.
Foreign-investment levels declined last month from the U.S.,
Europe, Japan and Southeast Asia, the ministry said, and increased
from South Korea and the U.K.
"Overall with the Chinese data recently, we've seen a slowdown
in industrial China, the older economy," said Oliver Barron,
Beijing-based senior analyst with North Square Blue Oak, an
investment bank. "This suggests FDI is reflecting the overall trend
of restructuring, as companies involved in those sectors see a
slowdown."
China attracted $7.2 billion of foreign direct investment in
August, the commerce ministry said, down 14% from a year earlier
and its lowest level since July 2010. That compares with $7.81
billion in July, which was down nearly 17% from a year earlier. FDI
in the January-August period, meanwhile, fell 1.8% compared with
the year-ago period to $78.34 billion.
On Saturday, the National Bureau of Statistics reported that
industrial production in August grew at its slowest pace since the
global financial crisis in 2008, sending jitters through regional
markets early this week.
The slowdown in foreign investment comes as over 30 foreign
companies including chip maker Qualcomm Inc. and Microsoft Corp.
come under scrutiny from China's antitrust regulators. Qualcomm has
said it is cooperating with authorities; Microsoft has said that it
abides by laws in China and is cooperating with investigators.
International business lobbies have complained about the Chinese
investigations, while U.S. Treasury Secretary Jacob Lew warned in a
letter that the probes could have serious implications for
relations between the two countries.
A recent survey by the American Chamber of Commerce in China
found that 60% of companies feel less welcome in China than before,
a sharp increase from 41% in the previous poll a year ago. In a new
question for its members, 49% of respondents believe that foreign
firms are being singled out for attack.
"I think it must have an effect on FDI. The regulatory
environment has turned less friendly," said ING economist Tim
Condon. "There may be a transition while people wait for the
regulatory dust to settle."
Still, he and others were skeptical that antitrust concerns
would have longer-term effects because China is still growing
faster than other major economies.
Shen Danyang, a spokesman for China's Commerce Ministry, said in
a briefing Tuesday that China doesn't discriminate against foreign
companies. "Complaints about China's targeting foreign firms to
help domestic firms are not true," he said. "China's antitrust
probes are all for the purpose of creating a better business
environment and absolutely not targeting certain types of
firms."
There is no evidence of capital flight from the world's
second-largest economy, Mr. Shen said, adding that the ministry is
watching cross-border capital flows closely.
China's central bank and financial institutions sold a net 31.15
billion yuan ($5.07 billion) of foreign currency in August,
compared with a net purchase of 37.84 billion yuan in July, the
central bank said Monday. Most analysts view the figures as a proxy
for inflows and outflows of foreign capital since most foreign
currency entering the country is generally sold to the central
bank.
China's outbound investment is increasing this year, but at a
slower pace. Nonfinancial overseas direct investment rose 15.3%
year-to-year in the first eight months of the year to $65.17
billion, the commerce ministry said. Mr. Shen attributed the slow
growth in ODI in part to difficulties Chinese companies faced
getting bank loans and handling fluctuations in the yuan.
Liyan Qi, Grace Zhu, Mark Magnier and Laurie Burkitt