Foreign direct investment in China climbed in January, adding to record inflows last year that are complicating Premier Wen Jiabao’s efforts to tame inflation in the world’s fastest-growing major economy.
Investment rose 23.4 percent to $10 billion last month from a year earlier, the Ministry of Commerce said in Beijing today. Estimates of four economists surveyed by Bloomberg News ranged from an increase of 10 percent to 23 percent.
China may need to add to last week’s third interest-rate increase since mid-October and allow faster appreciation of the yuan to control the cash that’s flooding the economy from the trade surplus, foreign investment and surging bank lending.
Inflation accelerated to 4.9 percent in January and the nation’s top economic planning agency said last month price gains will remain at a “high” level in the first quarter.
Rising incomes and demand for luxury goods will continue to attract foreign direct investments in China this year, after inflows rose to a record $105.7 billion in 2010。
Growth in foreign investment in service industries in January outpaced the overall increase, climbing 31.8 percent from a year earlier to $4.69 billion, according to today’s statement. Inflows into manufacturing gained 18.9 percent to $4.7 billion, the ministry said.
“The scale of foreign investment into the services sector will further expand as the structure of China’s economy transforms, especially in large cities,” Yao Jian, spokesman for the ministry, said at a briefing in Beijing today.
The number of new foreign-invested companies approved rose 20 percent from a year earlier to 2,243, and investment into western China surged 81 percent to $510 million, the data show. The proportion of foreign-invested companies targeting the domestic market now accounts for more than 60 percent of the total, Yao said.
Non-financial outbound investment in January rose 15.9 percent to $2.74 billion, the commerce ministry said. China’s investment in Africa last year was $10 billion.
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