China investment worries

In January, investment by overseas companies dropped 0.3 percent compared with the same month a year ago, constituting the third straight month in which foreign direct investment in China fell.

According to figures released by the Chinese Commerce Ministry Thursday, in January $10 billion (7.68 billion euros) were invested from abroad in the Chinese economy, down from $12.2 billion (9.38 billion euros) in December.

Shen Danyang, a spokesman for the Chinese Commerce Ministry, described the foreign investment situation as "relatively grim this year."

"Uncertainties over global economic growth, particularly Europe's fiscal woes, have dampened foreign investment in China," he told reporters in Beijing.

Investment from Europe fell 42.29 percent to $452 million in January, the figures show. However, US investment rose 29 percent to $342 million, Shen said, driven by Walt Disney Co. which "brought in funds for a theme park in Shanghai."

Countries in the Asia-Pacific region provided the biggest funding, accounting for investments worth $8.59 billion, up slightly by 0.77 percent year-on-year.

Cooler investment climate

Shen Danyang said growth in foreign direct investment was "weak all over the world", but he added that China's rising labor costs and an increasing number of strikes had a "negative impact" on overseas investments.

In the past three months, China was hit by a number of strikes in which workers protested against low salaries, wage cuts and poor working conditions.

In addition, foreign investors are growing frustrated about their China operations, as rising costs and violations of intellectual property rights are hurting their business, a US study published Wednesday has shown.

More than 90 percent of 300 US companies surveyed by the American Chamber of Commerce in Shanghai said that higher costs for labor and materials were burdening their business.

uh/nk (AFP, Reuters)