Foreign direct investment (FDI) into China last year jumped 14.9% to 1.15 trillion yuan ($180.75 billion), the country’s Commerce ministry said on Thursday.
In dollar terms, FDI rose 20.2% in 2021 to $173.48 billion, ministry spokesperson Shu Jueting told a news conference.
Analysts were unsurprised by the strong showing in 2021.
Fitch Ratings said China’s FDI growth is underpinned by a robust mergers and acquisitions deal pipeline and increasing intra-regional cooperation.
“However, manufacturing FDI growth is likely to stay muted as foreign companies continue to divert investment to lower-cost regions or their home countries,” Flora Zhu, director of corporates in Beijing, said in a recent note.
Zhu said China would see more inflow from the 14 member countries of the Regional Comprehensive Economic Partnership, which will take effect in 2022.
Members, which include Singapore, South Korea and Japan, accounted for 42% of China’s total FDI in 2020, excluding Hong Kong and Macau.
“Nevertheless, manufacturing FDI trends remain anaemic, dampened by ongoing investment diversion to bolster supply-chain security,” Zhu added.
FDI inflow in China’s manufacturing sector had been contracting year-on-year since 2019. The 10% increase in high-tech manufacturing in the first 10 months of 2021 only made up for the low base caused by the Covid-19 pandemic.
- Reuters, with editing by George Russell
READ MORE:
China Pulled Plug on Economic Recovery Too Soon, Says IMF Chief
China Largely Tames Inflation During 2021 – Xinhua
China Cabinet Plan To Boost Scale Of Digital Economy
