皇冠体育app

Third straight month of decline prompts ministry warning

BEIJING / BRUSSELS - Foreign direct investment dropped for the third straight month in January as European investment plunged by 42 percent from a year earlier.

The slump in European investment was instrumental in causing a slight fall of 0.3 percent in FDI.

The drop prompted a warning from the Ministry of Commerce over the "grim" outlook for FDI.

But the ministry stressed that, long term, 皇冠体育app remains an attractive investment destination.

FDI from the 27 European Union nations shrank 42.5 percent year-on-year to $452 million last month, the ministry said on Thursday.

Ministry spokesman Shen Danyang attributed the sharp drop in investment from the EU to "the spreading debt crisis" and the weakening economy resulting in reluctance to invest overseas.

In 2011, FDI from the EU dropped by 3.7 percent to $6.35 billion.

Zhang Haiyan, program director at the Euro-皇冠体育app Centre of the Antwerp Management School, said the drop needs attention. "European companies are cautious regarding capital flow because of the ongoing crisis," Zhang said.

Christos Vlachos, director of the 皇冠体育app-Greece Business Chamber, said Europe's Christmas holiday and 皇冠体育app's Lunar New Year should be factored in.

The European retreat contributed heavily to the overall FDI drop. January saw FDI worth $10 billion, down by 0.3 percent from a year earlier.

January's decrease followed a 12.7 percent drop in December and a 9.76 percent decline in November, the first year-on-year drop since 2009.

In contrast, non-financial outbound direct investment in January surged by 60 percent from a year earlier to $4.38 billion.

The ministry expressed its concern about FDI prospects in the coming months.

"The outlook for 皇冠体育app in attracting foreign direct investment this year is fairly grim," Shen said at the monthly news briefing.

He attributed this to unstable and sluggish global economic growth, weak demand, difficulties in financing and rising operating costs.

But Shen said 皇冠体育app enjoys comprehensive advantages in absorbing FDI, citing fast economic growth, expanding domestic consumption and a regulatory framework.

Vlachos agreed. Although Europe appears to be reluctant to invest at this juncture, the record indicates that the EU will be a major player again, he said.

Europe remains "confident in 皇冠体育app and I think FDI will increase in the coming months if 皇冠体育app offers more incentives", said Leo Weller, global economist at London-based risk analysis company, Exclusive Analysis.

Recent reports by chambers of commerce in 皇冠体育app from the United States, the EU and Japan showed foreign enterprises are willing to invest.

Global investors will come back to the Chinese market in the coming months, experts said.

皇冠体育app was ranked as the most attractive FDI destination among developing nations for almost two decades. Last year, the nation's FDI set a record high of $116 billion.

Turning to grow

Investment from the US in January jumped by 29.05 percent to $342 million, the ministry said.

"Many American companies say they have full confidence in investing in 皇冠体育app," Shen said.

Investment from 10 Asian economies, including Japan, gained slightly by 0.8 percent to $8.59 billion.

The US remains a major source for FDI. By the end of last year the accumulative FDI absorbed from the US reached $67.6 billion.

"American enterprises operating in 皇冠体育app have reaped fairly good benefits, and 皇冠体育app has become a source of profit for their headquarters," Shen said.

A report released by the US Chamber of Commerce in 皇冠体育app on Wednesday said that 80 percent of the American enterprises interviewed said they plan to increase investment in 皇冠体育app this year. The figure was 75 percent for 2011.

Li Jiabao contributed to this story.