Foreign investment in China falls in January

Uncertainties over global economic growth, particularly Europe's fiscal woes, dragged on foreign investment in China.

BEIJING: Foreign direct investment in China fell in January for the third straight month, figures showed Thursday, and a commerce official warned of a tough year ahead due to the European debt crisis.

Investment by overseas companies fell 0.3 per cent year-on-year to $10.0 billion last month, the commerce ministry said, compared with $12.2 billion in December.

"The foreign investment situation this year is relatively grim," commerce ministry spokesman Shen Danyang told reporters.

He said uncertainties over global economic growth, particularly Europe's fiscal woes, had dragged on foreign investment in China.

Inward investment from Europe fell 42.49 per cent from a year earlier to $452 million in January, figures showed.

But US investment rose 29.05 per cent to $342 million as Walt Disney Co. brought in funds for a theme park currently being built in the commercial hub of Shanghai, Shen said.

He gave no figures, but investment in the Disney park has been estimated at $3.7 billion.

Foreign investment from countries in the Asia-Pacific region -- which accounted for the bulk of total investment -- rose slightly, edging up 0.77 per cent to $8.59 billion.

Shen said growth in foreign direct investment was weak all over the world, but he added China's rising costs and labour strife would have a negative impact on overseas investment in the Asian powerhouse.

China has been hit by a series of strikes at foreign and domestic firms since November last year, as workers protest over low salaries, wage cuts and poor conditions amid cutbacks due to the global economic slowdown.

A survey published Wednesday also showed that US companies in China said they were growing less optimistic about their operations, as rising costs and violations of intellectual property rights hurt their businesses.

More than 90 per cent of 300 firms surveyed by the American Chamber of Commerce in Shanghai said higher costs for labour and materials were hindering their business, threatening China's competitive advantage.

However, analysts have warned that economic data for January may be distorted by the unusually early Chinese Lunar New Year holiday, which fell in January.

Many companies close their doors during the week-long break, also known as the Spring Festival, so employees can travel home to celebrate the most important festival in the Chinese calendar with their families.