FOREIGN direct investment in China gained at the fastest pace in 27 months in June, a rare piece of good news after a slew of disappointing activity data.
But it is still early to say whether the momentum will be sustained as the FDI figure can easily be affected by major projects, a commerce ministry official said.
Foreign investors channeled a total of US$14.4 billion into China last month, up 20.1 percent from a year earlier, the Ministry of Commerce said yesterday.
The pace quickened from May's increase of 0.29 percent, and extended growth to the fifth month in a row.
Ministry spokesman Shen Danyang said China's inbound foreign investment has been relatively stable this year against the backdrop of shrinking global investments.
Coastal areas like Shanghai and Jiangsu Province have explored new fronts, such as the culture and health care sectors, to attract foreign investment, Shen said.
In Shanghai, United States-based Dreamworks Animation has spent up to 725 million yuan (US$116.9 million) in setting up two joint ventures with its Chinese partner.
Also in Shanghai, a medical management company had been established with US investment.
"But it is still hard to say that China's foreign investment has fully recovered to the pre-crisis level - with encouraging data of simply one month," Shen said.
Sun Lijian, an economics professor at Fudan University, said the sharp rise in foreign investment in June was partly due to higher investment costs. "But China's efforts on industrial restructuring has attracted some investors who bet on China's longer-term growth that should be driven by innovation and technology."
According to a recent survey by the German Chamber of Commerce in China, nearly 50 percent of German companies here plan to increase their investments this year, based on their confidence in the country's economic outlook.
China's gross domestic product expanded 7.6 percent from a year earlier in the first half, failing expectations of a mild recovery.
But investors from the European Union and the US still raised their capital input. In the first six months, investment from the 27-member EU rose 14.7 percent to US$4 billion, while capital from American firms jumped 12.3 percent to US$1.8 billion.
China attracted US$61.9 billion in foreign investment from January to June, up 4.9 percent on an annual basis.
Meanwhile, China's outbound direct investment surged 29 percent to US$45.6 billion in the January-June period, ministry data showed, indicating Chinese investors' strong enthusiasm in globalizing their businesses.
"Chinese investors now target a wide range of investment destinations," Shen said. "Also, more private companies are becoming global investors."
China's outbound investment in the US, Australia and the EU rose by 290 percent, 93 percent and 50 percent respectively in the first six months, with investment in Africa up 71 percent.
Outbound foreign investment by non-state-owned companies expanded 27 percent to US$14.1 billion, 31 percent of the total.
On China's weakening trade, Shen said the ministry was studying supportive policies in a bid to create a business climate that can both stabilize growth and accelerate industrial upgrading, and benefit exports and imports while encouraging traders to explore new markets.
