China’s 2008 FDI Rises to US$92.4 Billion

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Jan. 15 – An official from China’s Commerce Ministry announced that the country attracted US$92.4 billion worth of foreign direct investment in 2008, a 23.6 percent increase from 2007 figures.

Commerce Ministry spokesman Yao Jian told Reuters said that in December FDI inflows amounted to US$6 billion while the cumulative total for the previous 11 months was US$86.4 billion. December FDI inflow slowed by 5.7 percent to US$5.98 billion compared to figures from a year earlier.

While FDI did fall in December, China’s figures for the year are impressive. The sheer volume of investment points to a number of factors, and even with a worldwide recession, the prognosis for 2009 should be strong.

Shuttered factories in the Pearl River Delta and migrants returning early for Chinese New year may be grabbing a lion’s share of the international press these days,but other regions in China, especially those whose economies are not intrinsically tied to exports, are in good shape.

Provinces farther inland that have not profited as much from the huge export boom of the past three decades are now investing in projects that will both create jobs and boost infrastructure, raising their long-term economic viability.

Jiangxi Province is investing some RMB600 billion in fixed assets such as highways, railways, airports and water projects, while Henan Province has earmarked RMB1.2 trillion for agriculture, transport, energy and urban construction. Gansu Province plans RMB16.5 billion for transport facilities and infrastructure.

In 2007, China attracted US$74.77 billion worth of non-financial FDI, an increase of 13.6 percent from 2006.

“These figures reflect accurately upon the performance of our firm, which specializes in handling FDI into China, ” said Chris Devonshire-Ellis, senior partner at Dezan Shira & Associates. “While we expect Q1 to fall, we are quietly optimistic for 2009 – China will still see growth between 7-9 percent and that is a much better rate of return than the apparently stagnant economies in the United States and Europe.”

Because of China’s potential, Devonshire-Ellis believes money will continue to flow into the country as investors look to sell to the domestic market. “Executives looking to get growth into 2009 figures will have little option than to press forward with investments into China, India and the other emerging markets that possess a large consumer base,” he said.