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Strategies & Market Trends : China Warehouse- More Than Crockery -- Ignore unavailable to you. Want to Upgrade?

To: RealMuLan who wrote (2093)	12/18/2003 1:43:58 PM
From: RealMuLan	Read Replies (1) \| Respond to of 6370

China FDI slump may signal fewer big deals Thu December 18, 2003 02:00 AM ET (Page 1 of 2) By Scott Hillis BEIJING, Dec 18 (Reuters) - Is the day of big foreign moves into China over? A drop in foreign direct investment in recent months has some economists wondering whether the world's sixth-biggest economy is losing its lustre. While China remains a top destination for foreign capital, foreign direct investment -- in which investors acquire non-financial assets, such as factories -- has plummeted over the past year. It was down 39 percent in November from a year earlier, at $3.6 billion. Chinese officials had confidently predicted foreign direct investment would rise 10 percent to $57 billion for the whole of 2003, but just $47 billion arrived in the first 11 months, equal to the same period last year. Direct investment gathered steam in the first half, peaking at $7 billion in July alone. After that it plunged and has failed to top more than $3.6 billion in any one month. The delayed effect of the SARS outbreak helped dry up the flow of cash, economists said, adding that an inherent volatility of monthly investment made it a tricky number to forecast. But lately there have also been fewer huge deals like the record $4.3 billion petrochemicals plant announced last November by Royal Dutch/Shell Group (RD.AS: Quote, Profile, Research) (SHEL.L: Quote, Profile, Research) . One of the last mega-deals was declared in June by Nissan Motor Co Ltd (7201.T: Quote, Profile, Research) , which kicked off a $2 billion venture to help it catch up to rivals, such as General Motors, that had placed their big China bets years ago. "A lot of the big companies, the Fortune 500, have already invested in China. They need time to digest before they top up their investments," said Tai Hui, an economist with Standard Chartered in Hong Kong. With deep-pocketed multinationals having arrived early, a lot of new foreign direct investment (FDI) would come from smaller firms seeking to cut costs and nestle up to big customers already in China. "What will drive FDI going forward will be their suppliers from overseas, the suppliers of General Motors, the suppliers of Nokia," Hui said. Continued ... 1\| 2 Next reuters.com