China Foreign-Investment Gains Ease as Economic Slowdown Deepens

China Foreign-Investment Gains Ease as Economic Slowdown Deepens

Foreign direct investment in China rose in May by the least in four months, a sign of concern that growth is slowing in the world’s second-biggest economy.

Inbound non-financial investment increased 0.3 percent from a year earlier to $9.26 billion, the Ministry of Commerce said today in a statement in Beijing, after a 0.4 percent gain in April. China’s outbound investment rose 20 percent in the first five months of the year to $34.3 billion, compared with a 27.4 percent pace in January-April.

The report follows data indicating capital inflows slowed last month while growth decelerated in exports, industrial production and lending. Confidence is fading in an economic rebound this quarter, with investment banks from Morgan Stanley to Barclays Plc cutting their 2013 expansion forecasts.“Growth in developed markets is picking up while China’s growth is slowing down, and China is no longer an ideal place for low-value-added manufacturing,” Dariusz Kowalczyk, senior economist and strategist at Credit Agricole CIB in Hong Kong, said before the release.

South Korea-based Samsung Electronics Co. (005930), the world’s largest smartphone maker, may boost investment by $1 billion in Vietnam’s Bac Ninh province, the state-run Dau Tu newspaper reported last week.

The Chinese government is trying to streamline regulatory procedures for foreign investors to boost inflows as Premier Li Keqiang seeks to pare the government’s role in the economy. Huang Feng, deputy director of the Commerce Ministry’s FDI department, said June 4 that the ministry’s examinations of projects fell to about 100 in 2012 from more than 3,000 in 2005.

NDRC Projections

The National Development and Reform Commission, China’s top economic-planning agency, said March 5 that foreign direct investment may rise about 1.2 percent to $113 billion this year. Outbound investment was projected to increase 15 percent to $88.7 billion, the agency said in its annual report to the legislature.

Foreign-invested enterprises contributed half of the country’s exports and imports in 2012, a quarter of industrial output and a fifth of tax revenues, according to data from the Ministry of Commerce.

Data earlier this month showed export growth slumped to a 10-month low in May and imports unexpectedly fell, while new local-currency lending and industrial production trailed estimates.

Yuan positions at local financial institutions accumulated from sales of foreign exchange, an indication of capital inflows, rose in May by the least since November, central bank data showed last week.

–Zhou Xin, with assistance from Nicholas Wadhams in Beijing. Editors: Scott Lanman, Sunil Jagtiani

To contact Bloomberg News staff on this story: Xin Zhou in Beijing at xzhou68@bloomberg.net

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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