Feb 16, 2009, 10:16 GMT
Beijing - China's foreign direct investment fell by 33 per cent year-on-year in January due to the global financial crisis, the commerce ministry said on Monday.
The size of the fourth consecutive monthly drop in foreign direct investment was also influenced by last month's lunar new holiday and a particularly high total in January 2008, ministry spokesman Yao Jian told reporters.
China officially used foreign investment valued at 7.54 billion dollars last month, Yao said.
'Foreign investors are withholding their money because of the spreading global financial crisis,' the official Xinhua news agency quoted government economist Zhang Yansheng as saying.
'China won't be an exception in this [global economic] downturn,' Zhang said.
China used foreign investment valued at 92.4 billion dollars last year, up 24 per cent from 2007, but recorded an even higher monthly slump of 37 per cent year-on-year in November.
News of falling investment follows millions of job losses in coastal areas specializing in exports, the largest monthly drop in exports for 13 years in January, and plunging urban property prices.
But Yao said retail sales rose 24.5 per cent year-on-year in January, partly spurred by an early Chinese new year, which celebrated according to a traditional lunar calendar.
Retail sales of food, cigarettes, alcohol and jewellery all rose sharply in January, he said.
Vehicle sales also climbed by 4.4 per cent to 735,500 units in the month, following government tax breaks, Zhang said.
China's main stock market index, the Shanghai Composite, gained nearly 3 per cent on Monday despite the bad news on foreign investment.
Premier Wen Jiabao on Sunday said China needed a 'profound understanding of the severity of the international financial crisis and uncertainties caused by it.'
Wen told a meeting on economic policy that China must 'fully gauge the difficulties ahead and be more decisive in taking policy measures.'
'We should strengthen confidence [so] that the country's economic fundamentals and the optimistic trend remain unchanged,' the agency quoted him as saying.
'We certainly have the confidence, conditions and capabilities to overcome the difficulties,' he said.
Wen is preparing to deliver a key address on economic policy and performance next month at the annual National People's Congress, the nominal parliament of the ruling Communist Party.
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