July Foreign Direct Investment Hits 2-year Low

%3CP%3E%3CFONT%20face%3DVerdana%3EForeign%20direct%20investment%20into%20China%20hit%20a%20two-year%20low%20in%20July%2C%20reflecting%2C%20in%20part%2C%20global%20investor%20concern%20over%20slowing%20growth.%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3EMinistry%20of%20Commerce%20officials%20insisted%20that%20the%20decline%20was%20temporary%2C%20while%20economists%20proposed%20long-term%20measures%20to%20address%20the%20drop.%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3EFDI%20fell%20by%208.7%20percent%20from%20a%20year%20earlier%20to%20%247.58%20billion%20in%20July%2C%20the%20smallest%20inflow%20since%20July%202010%20and%20the%20eighth%20drop%20in%20nine%20months%2C%20the%20Ministry%20of%20Commerce%20said%20on%20Thursday.%20May%20saw%20a%20slight%20rise.%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3EMinistry%20spokesman%20Shen%20Danyang%20blamed%20both%20international%20and%20domestic%20factors%20for%20the%20setback.%20Domestic%20factors%20included%20tight%20land%20supply%2C%20rising%20labor%20costs%20and%20lackluster%20consumer%20spending%2C%20he%20said.%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3EBut%20Shen%20insisted%20that%20the%20decline%20is%20temporary%20due%20to%20the%20long-term%20attractiveness%20of%20investment%20opportunities.%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3EEconomists%20pointed%20to%20a%20weak%20performance%20on%20the%20macroeconomic%20level%20as%20a%20contributing%20factor%20to%20the%20fall.%20Zhang%20Xiaoji%2C%20director-general%20of%20the%20foreign%20economic%20relations%20department%20at%20the%20Development%20Research%20Center%20of%20the%20State%20Council%2C%20interpreted%20the%20decline%20as%20a%20response%20to%20lower%20growth.%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3EZhang%20proposed%20that%20the%20government%20should%20allow%20investors%20greater%20access%20to%20the%20service%20industries%20and%20open%20up%20some%20of%20the%20remaining%20sectors%20in%20manufacturing.%20GDP%20expanded%20by%207.6%20percent%20in%20the%20second%20quarter%20this%20year%20from%20a%20year%20earlier%2C%20down%20from%208.1%20percent%20in%20the%20first%20quarter%2C%20and%20was%20the%20lowest%20since%20the%20second%20quarter%20of%202009.%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3EPremier%20Wen%20Jiabao%20admitted%20on%20Tuesday%20that%20the%20%22downward%20pressure%22%20on%20the%20economy%20was%20%22relatively%20large%22%20and%20would%20remain%20so%20for%20some%20time.%20Growth%20in%20industrial%20output%20fell%20to%209.2%20percent%20year-on-year%20in%20July%2C%20down%20from%209.5%20percent%20in%20June%20and%20was%20the%20lowest%20since%20May%202009%2C%20according%20to%20the%20National%20Bureau%20of%20Statistics.%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3EElectricity%20generation%20edged%20up%20only%202.1%20percent%20year-on-year%2C%20indicating%20a%20sharper%20slowdown%20in%20heavy%20industry.%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3EAnother%20complication%2C%20besides%20the%20growth%20slowdown%2C%20is%20the%20recent%20yuan%20depreciation%2C%20said%20Wang%20Jun%2C%20senior%20economist%20at%20the%20China%20Center%20for%20International%20Economic%20Exchanges.%20Wang%20forecast%20GDP%20growth%20in%20the%20third%20quarter%20to%20be%20even%20worse%20than%20the%20second%20quarter%2C%20and%20that%20could%20be%20lower%20than%207.5%20percent%20year-on-year.%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3ESome%20economists%20said%20they%20believed%20the%20United%20State%27s%20manufacturing%20revival%20could%20be%20a%20new%20factor%20contributing%20to%20China%27s%20FDI%20decline%20as%20well%20as%20eurozone%20financial%20woes.%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3EUnder%20these%20circumstances%20US%20companies%20will%20inevitably%20reconsider%20their%20China%20investment%20strategy%2C%20noted%20Lu%20Zhengwei%2C%20chief%20economist%20with%20the%20domestic%20Industrial%20Bank.%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3EInvestment%20from%20the%20EU%20was%20%243.97%20billion%20in%20the%20first%20seven%20months%2C%20down%20by%202.7%20percent%20year-on-year.%20German%20companies%20were%20Europe%27s%20champions%20in%20China%20investment%2C%20having%20committed%20%24960%20million%20in%20the%20same%20period%2C%20a%20surge%20of%2027.12%20percent%20from%20a%20year%20earlier.%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3EAlso%20in%20the%20first%20seven%20months%2C%20investment%20from%20Japan%20rose%20by%2019.1%20percent%20year-on-year%20to%20%244.73%20billion.%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3EEconomist%20Zhang%20Xiaoji%20said%20it%20is%20important%20for%20China%20to%20develop%20and%20demonstrate%20long-term%20advantages%20in%20attracting%20FDI%20as%20rising%20wages%20are%20weakening%20its%20traditional%20advantage.%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3EODI%20surges%3CBR%3EIn%20the%20meantime%2C%20China%27s%20outbound%20investment%20surged%2052.8%20percent%20year-on-year%20to%20%2442.22%20billion%20in%20the%20first%20seven%20months%2C%20centering%20on%20service%20industries%20rather%20than%20targeting%20resources%20and%20energy%20products%2C%20Shen%2C%20the%20Ministry%20of%20Commerce%20spokesman%2C%20said.%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3E%28CRI%20English%29%3CBR%3E%3C/FONT%3E%3C/P%3E