China's foreign direct investment is on track to top $100 billion in 2012 even as the longest run of year-on-year declines in inflows since 2009 extended into October, dragged down by an uncertain outlook for corporate spending as global trade sags.
The Commerce Ministry said on Tuesday that China drew $91.7 billion in foreign direct investment between January and October, down 3.45 percent on the same period a year ago, marking the 10th month that aggregate year-to-date flows fell compared with the previous period.
"We can see that there are still many uncertain factors weighing on the global economy and the most severe aspect is the weak world demand," Commerce Ministry spokesman Shen Danyang told a news conference. China's economy is acutely sensitive to external demand, despite a gradual rebalancing towards domestic consumption. Total exports were worth about 31 percent of GDP in 2011, according to World Bank data, and an estimated 200 million Chinese jobs are in the export sector or supported directly by foreign investment, making FDI a particularly important gauge of prospects for China's vast factory sector.
China's October export growth darted to a five-month high above 11 percent, surpassing the forecasts of economists in the benchmark Reuters poll, but analysts and officials alike are wary of over-interpretation of the strength of the trade bounce. Data from China's Customs Administration showed total trade expanded by 6.3 percent in the first 10 months of 2012 from year ago levels.
Services sector inflows in the first 10 months of the year were $43.7 billion, down 1.8 percent on a year ago. Within that sector, real estate inflows were down 6.1 percent. Excluding real estate, services inflows were up 2.1 percent year-on-year. Manufacturing sector inflows meanwhile stood at $40.4 billion between January and October, down 7.3 percent versus the same period in 2011.
Investment from China's biggest export market - the debt-ridden, recessionary European Union - dropped 5.0 percent year-on-year in the January-to-October period. FDI from the top 10 Asian economies, including Hong Kong, Japan and Singapore and which are levered to China's own growth, fell 4.7 percent to $78.0 billion in the first 10 months. Inflows from the United States rose 5.3 percent during the same period.
China drew $116 billion in foreign direct investment last year, a record according to the Commerce Ministry which aims to attract an average of $120 billion in each of the four years from 2012 to 2015. China's outbound direct investment from non-financial firms in the first 10 months totalled $58.2 billion, up 25.8 percent year-on-year, the Ministry said.