FDI flows to China still strongForeign direct investment (FDI) in China continues to be on a strong perch with double-digit growth rates during the first seven months of the year, even though there has been a marginal slowdown in investments from the European Union (EU).
Experts, however, say that the slowdown in European investments is only a short-term blip on the FDI radar and will soon gather momentum.
Investment from the European Union in China between January and July recorded a year-on-year growth rate of just 1.36 percent to $4.08 billion (2.84 billion euros). During the same period 976 EU companies set up bases in China, a year-on-year increase of 7.14 percent.
US investments in China also fell by nearly 19.17 percent year-on-year to $1.94 billion in the first seven months as the debt crisis continued to extract a heavy toll on the US economy. In contrast, investment flows from the Asia-Pacific region, including Japan, Malaysia and Singapore, saw an increase of 23.67 percent to $59.54 billion.
Total FDI jumped 18.6 percent year-on-year in the first seven months to $69.2 billion. Foreign investors set up about 15,600 new companies during the period, up 7.89 percent.
According to Commerce Ministry spokesman Yao Jian, the slowdown or decline in EU and US investments in China has more to do with the overall global environment.
He pointed out since EU member countries had reduced investment in foreign countries by 62 percent in 2010, it was only normal for them slow down investments in China considering the overall situation in Europe.
But other economists believe that the slowdown in EU investment is only a temporary phenomenon.
Lang Qi, a researcher from a Shanghai-based security company, says uncertainties in the global economy and the bleak outlook have held back investment from developed nations, but "China's attractiveness is still there" and "there is no sign of a sharp drop coming".
A recent survey of its member companies released by the European Union Chamber of Commerce in China (EUCCC) and Roland Berger Strategy Consultants shows that more than half of the European companies were optimistic about future growth within their sector in China.
But EUCCC cited "the investment concerns of European enterprise related more to unfair competition and lack of a fair business environment".
European Chamber President Davide Cucino had in a press conference in Beijing indicated that a good business environment would help ensure that European enterprises would continue to make contributions to the Chinese market. This will be the norm in the foreseeable future.