Foreign direct investment (FDI) fell last month, the fourth straight fall, while investment from Europe had a sharp decline, according to the Chinese Ministry of Commerce.
Economists were not positive about the inflow of foreign investment into China as the European debt crisis continues and domestic economic growth slows down. The flow change was expected in view of the global economic problems and reduced growth
Foreign Investment in February dropped by 0.9 percent year-on-year to $7.73 billion, following a 0.3 percent drop in January.
It is difficult to be optimistic about the outlook for FDI given the doubts in the minds of foreign companies about the global economy and China's foreign investment environment, stated a ministry spokesperson.
The first two months of the year have seen investment into China from the 27 EU nations drop by 33.32 percent, from the previous year, to $906 million.
German Finance Minister Wolfgang Schaeuble and his French counterpart Francois Baroin said that the worst of the eurozone crisis appeared to be over, but they warned member states that they will have to continue reform.
Outflows from the Asia-Pacific region and the United States are positive. From January to February, investment from Asian nations and regions, including Japan, the Republic of Korea and Singapore, increased by 2.66 percent year-on-year to $15.38 billion, and from the US rose by 0.87 percent to $525 million.
The US Federal Reserve recently slightly upgraded its outlook, expecting moderate growth over coming quarters and a gradual decline in the unemployment rate.
Surveys by the chambers of commerce from Japan, the US and the EU, all showed that a majority of companies are confident in Chinese markets and would like to further invest here. But there are criticisms, especially concerning laws and regulations, market access and rising labor costs.
China has witnessed rapid growth (in FDI) for a few decades. We cannot expect robust growth to be sustained over a long period.
In the new industrial guidelines for foreign investors, China said it encourages foreign companies to invest in high-end manufacturing, services, high-tech and strategic emerging sectors.
Citigroup said recently it plans to double its branches in China to 100 in the next two to three years.
the sovereign wealth fund which recently received an injection of $30 billion from the government, will mainly focus on investing in Europe in the short term, while financial assets are undervalued and there are limited financial risks in purchasing. Recently the Chinese Premier assured the EU that China would assist with the EFSF and the EU debt crisis.