Japan's direct investment in China down by 20 per cent in Jan

Beijing, Feb 21 (Kyodo) Deteriorating ties between Japan and China over the territorial dispute in East China Sea has led to a decrease in Japan's investment in China, which has come down by about 20 per cent in January, Chinese officials said.
Japan's direct investment in China totalled USD 640 million in January, down 20 per cent on the year, the Chinese Ministry of Commerce said.
The drop appears to be due to Japanese companies holding back on investment in China due to an anti-Japan consumer backlash over a territorial dispute in the East China Sea, and brings into sharper relief the cooling of economic ties between the two countries.

Overall FDI inflows into China in January shrank by 7.3 percent on the year to USD 9.27 billion, marking the eighth straight month of decline, the ministry said.
The decline is attributed to rising labor costs in the country, which have made it less attractive to foreign investors already facing a general slowdown in the global economy.
The slowing of investment from abroad, which has supported China's economic growth, is expected to add to the sense of uncertainty over the outlook of the Chinese economy.

In January, direct investment from the United States dropped 20 per cent on the year, while that from Hong Kong fell by 10.2 percent.

Capital inflow from 10 Asian nations and regions, including Japan and Hong Kong, was down 9 percent.
In contrast, FDI from the 27-nation European Union totaled 820 million, up 81.8 percent from a year ago.
Meanwhile, China's overseas direct investment increased 12.3 percent in January on the year to USD4.91 billion.
With regard to a full-year forecast for 2013 of FDI inflows, ministry spokesman Shen Danyang told a press conference yesterday that there are many factors of uncertainty, so the situation as a whole will be grim.
For 2012, FDI fell 3.7 percent from the previous year to USD 111.72 billion.

It was the first decrease since 2009, when China saw its FDI fall due to the global financial crisis sparked by the September 2008 collapse of Lehman Brothers Holdings Inc.