Foreign direct investment in China falls

For the fourth consecutive month, foreign direct investment (FDI) in China has declined as many companies throughout the world make cutbacks on spending and are showing real caution amid the global financial crisis.

According to data released by the Ministry of Commerce, China’s foreign direct investment fell 33% as total investment reached $7.54 billion, which was down 5.7% from the previous year.

A Moody’s economist suggested that foreign companies do still believe that China is still a prosperous place to do business but currently there is no spare money in budgets to allow for further investment in difficult economic times.

A commerce ministry spokesperson said the FDI decline has been affected by the credit crunch as well as the Chinese Lunar New Year holiday in January and the fact that last year’s figures were actually very high.

Generally across the world, FDI has fallen by 21 percent due a combination of tighter credit alongside the recession and tumbling profits.

According to the United Nations Conference on Trade and Development, the latest estimate indicates that this is likely to fall even further, although China reported a record $92.4 billion of incoming investment, the declines are only due to smaller increments per quarter on a record figure.

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