China’s First Quarter FDI At $29.9 Billion, Up 1.44 Percent

Foreign direct investments, or FDI, to China rose 1.44 percent for Q1 of 2013 annually, ending a streak of long annual declines and underscoring the volatility that persists in the economy. The total FDI inflows rose 5.65 percent to a total of $12.42 billion from a year ago, in March.

According to data released by the Chinese Ministry of Commerce on Thursday, FDI inflows totaled $29.9 billion year-on-year January to March 2013.

The surprisingly positive FDI data has come after a slew of weak data for Q1 that rattled investors’ confidence in the world’s third-largest economy. Official data released earlier in the week had depicted a surprise fall in the industrial production and an investment spending pointing to the continuing weakness in economic growth.

Inflows from the European Union rose 45 percent year-on-year to $2.1 billion, while those from the U.S. increased 18.5 percent to $1.1 billion. FDI from the major Asian economies, including Hong Kong, Japan and Singapore, eased by 0.3 percent to $25.8 billion, the ministry said.

Manufacturing sector FDI was up 0.6 percent to $13.2 billion from the same period in the previous year, while service sector inflows improved 2.8 percent to $14.4 billion annually.

In February, China had reported a recovery in FDI, posting an increase of 6.3 percent to $8.2 billion, after declining for eight consecutive months since June 2012. But analysts had pointed out that the data could be subjected to seasonal distortions due to the Chinese Lunar Year holidays.

FDI accounts for a small part in the country's overall foreign inflows in comparison to exports (Chinese exports were worth about $2 trillion in 2012), but it is a key barometer of the country’s overseas financial health.

Organisation for Economic Cooperation and Development, or OECD, data depicts China as one of the world’s top FDI destination.

China's new government is targeting $120 billion worth of FDI annually for the next three years.

In 2012, China's FDI stood at $111.7 billion, registering an annual drop for the first time in three years but remains close to the $116 billion FDI recorded in 2011.