FDI inches higher

China's foreign direct investment rose in June, reversing the trend in May, but the Ministry of Commerce also warned yesterday that foreign investment was entering an era of slower growth.

Foreign investors channeled US$14.4 billion of funds into China last month — up 0.2 percent from a year earlier, data showed. The rate reversed a 6.7 percent drop in May.

In the first half, foreign investment expanded 2.2 percent to US$63.3 billion with 10,972 new foreign ventures established on the Chinese mainland.

Ministry spokesman Shen Danyang said foreign investment growth had entered a phase of slower expansion due to economic slowdowns in developed markets and China's own economic restructuring.

"But the global proportion of foreign investment into China has been on the rise steadily... it was around 8 percent in 2013, double that of 2007, reflecting the sustained charm of China for foreign investors, even if the overall environment is not good," Shen said.

Competitive advantages like well-built infrastructure, a skilled labor force at a relatively low cost and huge market potential are attractive to foreign investors, Shen said.

He added the country's different economic structure compared to both developed and developing nations is a "strength that will hold for a long time."

"Foreign direct investment will be slow, but stable in the future," he said. "Investors looking for a massive market, especially those in the service sector, will drive that future growth."

Allaying concerns China attached less importance on foreign investment, Shen said the country treated all companies equally, and emphasized overseas investors had plenty of opportunities due to the constant opening-up process.

As a sign of efforts to restructure the economy, foreign investment flowing into China's service sector gained 14.8 percent to US$35.2 billion in the first six months, weighing 56 percent in the overall basket.

Meanwhile, the manufacturing sector attracted US$22.8 billion, down 13.9 percent on an annual basis, accounting for 36 percent in the basket.

Investment from the United Kingdom surged 76.4 percent in the January-June period, while that from South Korea jumped 45.6 percent. However, funds from the United States fell 4.6 percent while European Union investors reduced investment by 11.2 percent.

Shen said declining investment from both the US and EU was nothing to get concerned about, chalking up both drops to short-term volatility.