Foreign Direct Investment Grows to US$74.34 Billion in First Nine Months

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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.

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6 Responses

  • Daniel says:

    What is the break-down/source for this amount?

  • Chris Devonshire-Ellis says:

    @Daniel, I’m not sure what you mean by this – we mention the two sources in the article very clearly over the stats. Please advice if there’s something else you’re driving at.

  • Daniel says:

    Pardon for not asking clearly.

    Quote: “This brings total foreign direct investment to about US$74 billion”

    Foreign investment is money which comes from out side of China, right? It would be interesting to know from which countries and what is their portion. For example: France: 1 billion.

    Thanks.

  • Editor says:

    Dear Daniel,

    The National Bureau of Statistics hasn’t released the 2010 figures for sources of FDI, but based on 2009, the leading county by far is Hong Kong (US$54 billion in 2009), followed by Taiwan (US$6.6 billion), Japan (US$4.1 billion), Singapore (US$3.9 billion), the United States (US$3.6 billion), South Korea (US$2.7 billion), the United Kingdom (US$1.5 billion), Germany (US$1.2 billion), Macau (US$1 billion) and Canada (US$1 billion).

  • Chris Devonshire-Ellis says:

    Demonstrating that Hong Kong still remains an attractive tax haven for overseas companies (many of them 100% foreign owned) to use to invest in China – which is exactly the theme of the current issue of China Briefing Magazine this month (see top left of this page: “Using Hong Kong For China Operations”). Thanks – Chris

  • Paul Allen says:

    Dear Chris,

    I am doing an essay on:

    ‘Foreign Direct investment into China, since start of the Global Economic Crisis.’

    I wonder if you can point me to any sources or information that may be useful in answering this?

    Thanks – Paul

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