October 18 – China’s Ministry of Commerce reported on Friday that foreign direct investment in China grew by 6.14 percent year-on-year in September to reach US$8.38 billion.
This brings total foreign direct investment to about US$74 billion for the first nine months of 2010, 16 percent higher than the reported figures for the same period in 2009.
FDI is expected to top US$100 billion by the end of the year, which would be a record for foreign direct investment. China is the world’s leading destination for FDI, followed by India and Brazil.
According to the International Monetary Fund, China’s GDP growth rate is expected to reach 10 percent at the end of 2010, compared with a GDP growth rate of 8.7 percent last year.
Despite the surge in GDP growth this year, the economy is forecasted to slow to 9 percent in 2011, due to a projected lag in consumption. According to Liu Shijin, deputy director of the Development Research Center for the State Council, GDP growth will likely slow even further following next year, stabilizing the economic boom that China has seen in recent years and pointing to more “sustainable” economic growth.
“The first challenge comes from the rapid rise of labor costs in the country,” Liu told state media on Saturday. “The competitiveness of Chinese companies will be threatened by rising labor costs unless they find a new source of growth, such as innovation.”
In the next three to five years, China’s GDP growth will slow to a moderate speed of around 7 percent from its current 10 percent, Liu forecasts.