FDI inflow rises 10.44% in first two months

Foreign direct investment (FDI) into the Chinese mainland rose 10.44 percent year on year to reach 19.31 billion U.S. dollars in the first two months this year, the Ministry of Commerce said on Tuesday.

The growth rate marked a surge from the 5.25-percent year-on-year increase in 2013, but was lower than the 16.11-percent year-on-year rise in January.

Overseas investors set up 2,764 new enterprises in the mainland in January and February, down 5.18 percent year on year, ministry spokesman Shen Danyang said at a press conference.

FDI in the service sector gained 25.54 percent year on year to hit 10.61 billion U.S. dollars in the first two months, or 54.9 percent of the total, Shen said.

In contrast, the manufacturing sector saw its FDI inflows decrease 6.06 percent year on year to 7.02 billion U.S. dollars.

FDI from the United States gained 43.26 percent year on year to reach 711 million U.S. dollars. FDI from 10 major Asian economies climbed 11.58 percent year on year to 16.94 billion U.S. dollars, including a 17.63-percent rise from China's Hong Kong, and a 223.62-percent rise from the Republic of Korea.

But FDI from the European Union fell 13.82 percent year on year to 1.05 billion U.S. dollars.

With an inflow of 15.3 billion U.S. dollars, the affluent east of China continued to grab the lion's share of FDI in January and February.

However, the country's central and western regions have become increasingly attractive to foreign investors.

FDI inflows into the central region stood at 2.62 billion U.S. dollars in the first two months, up 75.02 percent year on year. The west bagged 1.39 billion U.S. dollars, up 28.98 year on year.

China's outbound direct investment by non-financial firms decreased 37.2 percent year on year to stand at 11.54 billion U.S. dollars, according to the ministry.

In January and February, investment in the United States rose 45.6 percent year on year and that in Australia gained 31 percent year on year.

In response to a question about whether the yuan's recent depreciation is a result of government intervention, Shen warned against hype about the recent downward movement in the value of the currency against the U.S. dollar.

The yuan's value came under the spotlight as its exchange rate against the U.S. dollar declined 0.4 percent in the first two months this year, a period in which the country also saw a shrinking trade surplus.

"People should put the yuan's recent depreciation in the wider context of China's reform of its currency's exchange rate formation mechanism," Shen added.

China's central bank widened the yuan's daily trading band from 1 percent to 2 percent on Monday.

The move aims to enhance the floating flexibility of the Renminbi exchange rate, make capital allocation more efficient, facilitate economic restructuring and beef up the decisive role of market in allocating resources, the People's Bank of China said in a Saturday statement.

From the launch of the yuan's exchange rate reform in 2005 to the end of last year, the currency has appreciated by 35.75 percent against the U.S. dollar, resulting in the currency's "effective" exchange rate rising 42.21 percent, according to Shen.

"We hold that the recent moves of the Renminbi are more a result of the market impact. Compared with the currencies of some emerging economies, the yuan's recent fluctuations remain in a normal range," he said. Endi