Foreign direct investment into China fell to its lowest level for four years in August as the government launched a series of price-fixing investigations into foreign firms operating in the country, according to media reports.
Investment into China dropped to $7.2 bn in August, the lowest since July 2010, the Financial Times reports, citing the newspaper’s own calculations based on data from China’s National Bureau of Statistics and figures from its Ministry of Commerce.
The figure fell 14 percent from the same month last year and followed a 17 percent year-on-year decline in July, according to the FT. It marks the first time foreign direct investment has dropped by more than 10 percent for two months in a row since 2009 during the global financial crisis.
The paper reports that investment dropped most notably from Japan this year, with a 43.3 percent fall in the first eight months compared with the same time last year. Foreign direct investment from the US and the EU also fell between 17 percent and 18 percent each, while investment from the UK increased 18.9 percent over the first eight months of 2014 and investment from South Korea jumped 31.3 percent over the same period.
China’s government has launched a series of investigations under its Anti-Monopoly Law into foreign companies including Qualcomm, Microsoft, Chrysler and Audi as well as companies from pharmaceutical and other sectors, claiming they are fixing prices and engaging in other monopolistic behavior. Government officials have warned that more investigations are likely to come, and the FT says this has played a large part in the drop in investment.
A survey last month by the US-China Business Council found that 86 percent of its members are concerned about the spate of investigations and 30 percent fear they, too, will face investigation. Another survey by the American Chamber of Commerce in China found that nearly half of its members had been targeted in anti-corruption or anti-monopoly investigations, and 60 percent say they feel less welcome in China than before.
At the same time, a ZEW survey of executives at German companies released this week shows an increase in the number anticipating deteriorating conditions for foreign investors in China over the next six months. Areas of concern include regulation over new business approvals, access to financing, corporate taxes and public tenders.
