'Grim outlook' for first six months prompts new govt approach

BEIJING - The "grim outlook" for foreign direct investment has prompted the government to consider measures to boost investment from developed countries, a trade official said.

"The outlook for inflows of foreign investment from the United States and the European Union will remain grim during the first half of this year," Liu Yajun, director of the department of foreign investment administration under the Ministry of Commerce, told China Daily.

"We are concerned."

As of late last year China witnessed a decline in FDI from developed nations struggling to keep their economies afloat.

FDI from the US shrank last year by 26.07 percent, from a year earlier, to $3 billion, and investment from the 27-nation EU dropped slightly by 3.65 percent year-on-year to $6.35 billion, according to the ministry. Investment from the eurozone shrank in January by 42.5 percent year-on-year to $452 million.

"We cannot exclude the possibility that US and EU investment will continue to drop, as there are many uncertainties with the global economy," Liu said.

"Studies on reasons behind the decline and measures on how to maintain stable investment from developed economies are being carried out. This will be a priority this year," he said, but declined to disclose further details.

Although it hit a record high of $116 billion, year-on-year FDI growth slowed to 9.72 percent last year, compared with 17.4 percent in 2010.

"The investment from developed economies directly affects the picture of China's FDI in general," Liu said. "And it's not only about quantity, but also about quality," Liu said.

China's main target this year is to "stabilize the scale of its FDI and improve the quality".

High-tech and management experience brought from foreign companies in developed regions will help China transform itself into an innovative economy as pledged in the 12th Five-Year Plan (2011-15), he said.