Chinese exports slip as economy hits wall
Issued on: Modified:
Chinese exports and imports unexpectedly fell in November from the levels of the previous year, dramatically illustrating how abruptly the world's fourth-largest economy has slowed in response to the global credit crunch.
'Can China save the global economy?' - Business editor Douglas Herbert gives his view
AFP - Foreign direct investment in China fell by more than a third in November from a year earlier, the government said Wednesday, as the economic crisis dealt another blow to the country's economy.
Foreign direct investment (FDI) in November totalled 5.3 billion dollars, 36.5 percent lower than a year earlier, the commerce ministry said in a statement.
Month-to-month FDI figures can be volatile because one major deal can have a dramatic effect, but analysts said November's figures were likely the start of a longer term trend.
"The direction of China's economy is far from optimistic, discouraging foreign investors to enter," said Sherman Chan, a Moody's Economy.com analyst.
China's monthly FDI was likely to continue to fall until at least mid-2009 as the global economy continues to deteriorate, Chan wrote in a note.
However, she said China's FDI would be one of the first indicators to rebound once the global recovery begins.
The FDI for the first eleven months of the year rose 26.3 percent compared with the same period last year, the ministry said.
Foreign companies invested 86.4 billion dollars in the country in the period from January to November, it said.
The growth rate for the period was sharply slower than the 35.1 percent rise in the first ten months of the year.
FDI is one of the factors driving the rapid growth of China's foreign exchange reserves, which topped 1.9 trillion dollars at the end of September.
The November decline covers a period where business deals around the world ground to a standstill because lending dried up.
"It's a reflection of the global liquidity squeeze," said Ren Xianfang, a Beijing-based analyst with Global Insights.
The worsening profits outlook for Chinese companies also slowed the flow of outside investment, Industrial Bank economist Lu Zhengwei said.
"Since the beginning of this year, many export oriented factories in China had either gone bankrupt or were forced to close down," Lu said.
Daily newsletterReceive essential international news every morningSubscribe