FDI in China Springs Back by 5.25 Percent in 2013

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Jan. 17 – Total foreign direct investment (FDI) in China rose by 5.25 percent in 2013 after the decline which was witnessed in 2012. China’s Ministry of Commerce (MOFCOM) recently disclosed this information during a routine press conference on January 16.

According to Shen Danyang, the spokesman of MOFCOM, FDI statistics kept to a positive growth trend since February of 2013. While there were only 22,773 newly established foreign invested enterprises in total, a decrease of 8.63 percent compared to 2012, total FDI amounted to US$117.59 billion, an increase of 5.25 percent compared to 2012. The actual use of foreign capital in China was US$12.08 billion by December 2013, which rose by a year-on-year rate of 3.3 percent (excluding the financial sector).

Shen highlighted that one of the main reasons for the increase in FDI was the rapid bounce back of investment from European and American countries. FDI from the European Union totaled US$7.21 billion, an increase of 18.07 percent, while FDI from the United States increased by 7.13 percent and totaled US$3.35 billion.

FDI from Hong Kong, Singapore and Thailand rose by 9.86 percent, 12.06 percent and 389.31 percent respectively. However, investment from Japan and South Korea dropped by 4.28 percent and 0.23 percent respectively. The total FDI from Hong Kong, Macao, Taiwan, Japan, Philippines, Thailand, Malaysia, Singapore, Indonesia and South Korea amounted to US$102.52 billion.

It is noteworthy that the actual use of FDI in the service sector was US$61.45 billion, constituting over half of the total FDI in China for the first time. The social security service industry, electrical machinery repair industry and the entertainment industry were noticeable standouts.

The spokesman also added that total FDI in the central and western areas of China increased significantly. East China attracted the most investment out of all regions, accounting for 78.45 percent of the total FDI.

Chris Devonshire-Ellis of Dezan Shira & Associates comments that “FDI into China rose by over 5 percent last year, so professional services firms serving in China in any industry that did not show a growth in revenues in excess of that are merely treading water. Firms that had a growth rate lower than 5 percent are already losing market share in China.”

Dezan Shira & Associates is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in emerging Asia.

For further details or to contact the firm, please email china@dezshira.com, visit www.dezshira.com, or download the company brochure.

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