China's foreign direct investment shrank for the third consecutive month in January as firms in crisis-embroiled Europe slashed spending by over 40 percent, casting another pall over the outlook of the world's economic growth engine. The gloomy trend was augmented by China's trade ministry, which warned of grim times ahead and promised action to help struggling local exporters cope with lacklustre demand abroad.
But Shen Danyang, the spokesperson for the trade ministry, cautioned investors against excessive pessimism, saying it was too early to predict that China's import and export growth would shrink this year despite their shock contraction in January. Underscoring the turbulence European companies faced as the 27-member European Union battles a stubborn debt crisis, inflows from the region plunged 42.5 percent to $452 million.
Investment from the United States rose 29 percent to $342 million while that from 10 Asian countries including Japan edged up a mere 0.8 percent to $8.586 billion. In contrast, China's non-financial outbound direct investment in January leapt 60 percent from a year earlier to $4.376 billion.
Investment inflows into China surged in the years after it joined the World Trade Organisation in 2001, and have rebounded strongly after being hit hard by the 2008/09 global financial crisis.
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