China’s FDI and Trade Outlook Horrible Says Commerce Spokesperson

China's FDI and Trade Outlook Horrible Says Commerce Spokesperson

Image Caption: Propio, Trabajo. “Vista De Shanghai Desde El Hotel Peace, Shanghai View from Peace Hotel.”

Amid slowing economic growth and Europe’s fiscal woes, China’s commerce ministry said the outlook for foreign investment and trade is “grim”. “Due to growing downward pressures in the world economy, the external environment for China’s imports and exports is getting tougher and overall, the situation remains grim,” Shen Dangyang, the spokesperson for the Commerce Ministry said at a regular briefing today. The comments came just after data from the Commerce Ministry showed foreign direct investment in China fell for the third straight month in January. China drew $9.997 billion in foreign direct investment in January, down 0.3 percent from a year ago. The gloomy FDI data follows a Feb. 10 customs bureau report that showed exports last month fell for the first time in more than two years.

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Foreign direct investment from Europe fell 42.49 percent from a year earlier to $452 million in January, figures showed. However US investment rose 29.05 percent to $342 million, which according to analysts is largely due to the investments made by Walt Disney Co. in a theme park currently being built in the commercial hub of Shanghai. Inward investment from 10 Asian countries including Japan edged up a mere 0.8 percent to $8.586 billion.
The world’s second-biggest economy has seen a slump in home sales and slowdown in output as Premier Wen Jiabao sustains curbs on real estate. As inflation is moderating, the government is trying to assess whether

manufacturing and job gains in the U.S. can lead to a revival in trade. For the first time since 2008, the People’s Bank of China lowered the amount of deposits banks must set aside as reserves, in December, to encourage lending and support growth. But defying analyst estimates, the central bank did not announce another cut before the Chinese New Year holiday last month.
Since November last year, China has been hit by a series of strikes at foreign and domestic firms, as workers protest over low salaries, wage cuts and poor conditions amid cutbacks due to the global economic slowdown.
A survey conducted by the American Chamber of Commerce in Shanghai showed that US companies in China were worried that higher costs for labour and materials were hindering their business, threatening China’s competitive advantage.
Analysts have warned that economic data for January may be distorted by the unusually early Chinese Lunar New Year holiday, which fell in January. The benchmark Shanghai Composite Index closed 0.4 percent down.