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CHINA / National |
Foreign companies pouring money into China(Agencies)
Updated: 2008-01-22 15:15 BEIJING - Foreign firms invested a record 82.7 billion dollars in booming China last year, the government said Monday, with analysts adding the tide of money had undermined efforts to slow economic growth. The 2007 figure for foreign direct investment, or FDI, was up 13.8 percent from a year earlier, the commerce ministry said in a statement. China has been striving to cool its economy over concerns that it could overheat and shudder into a sharp slowdown, but analysts said the nation's still-explosive growth continued to lure foreign firms. "Inbound FDI is in no way helping the government's efforts to cool the economy, it is actually doing the opposite," said Feng Yuming, a Shanghai-based analyst with Oriental Securities. Experts estimate China's economy probably grew about 11.5 percent in 2007 -- the fifth consecutive year of double-digit percentage growth. Official figures are due Thursday, with many forecasters optimistic that China will grow reasonably strongly this year too despite the prospect of a sharp economic slowdown or even recession in the US. Foreign investment may continue to rise at a fast pace in 2008 due to the rising value of China's currency, the yuan, Feng said. "FDI growth may remain at the level of 10 percent or above because in order to build a factory, for example, it will take more foreign investment compared with before due to the further appreciation of the yuan," Feng said. Total foreign direct investment, excluding that in the financial sector, amounted to 74.8 billion dollars last year, up 13.6 percent year-on-year, the commerce ministry's figures showed. China drew a then record 69.46 billion dollars in FDI in 2006. The government has been trying to channel the money away from real estate, resources and export-linked sectors in the interests of economic stability. China's sensitive and growing trade surplus has led to foreign demands for the government to allow the yuan to rise more quickly. It rose from 7.80 yuan to the dollar at the beginning of 2007 to 7.24 by Friday last week. Analysts expect the yuan to continue its rise in 2008, likely luring even more foreign investors. "I think more hot money will come into China despite the government wanting the economy to slow down," Li Qing, a Shanghai-based analyst with E-capital Securities, said. "The main reason is the yuan appreciation and ... other economies around the world are slowing down." China had to take steps to curb the inflows and stimulate capital outflows because the economy still faced linked problems, such as rapid growth in asset prices and a severely skewed balance of payments, she said. Booming exports and FDI are the top factors behind the huge build-up in China's foreign exchange reserve, the world's largest. The reserve hit 1.53 trillion dollars by the end of 2007, up more than 40 percent. "China's economy is still going good," said Ma Qing, an economist with the Monitor Group. "Foreign companies can get a higher payback from investing in China than in other countries. China remains one of the most attractive FDI recipients in the world." |
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