China and India Headed in Opposite Directions on FDI

 Econintersect:  China’s Ministry of Commerce released figures showing that FDI (foreign direct investment) in China reached a new record in 2010, increasing 17% year-on-year.  FDI in China passed the US$100 billion mark for the first time to US$105.74 billion.In 2009 FDI for China had declined slightly (-2.6%).

About 23% of FDI into China went into real estate last year.

A Ministry of Commerce spokesperson, speaking ahead of a state visit to the U.S. by Chinese President Hu Jintao that started Tuesday, also urged the US to open up to Chinese direct investment, in particular in the steel and manufacturing sectors.  China wants US laws on investment by foreign firms to be made more transparent.

India has experienced the opposite trend with FDI.  As reported in a January 4 GEI News Brief, FDI in India was down sharply in 2010-11 fiscal year.  Through the first 8 months of the year FDI was down more than 27%.  And FDI in India is far below China to begin with.  For the 8 months, FDI totaled $14 billion, an annual rate of $21 billion.  This is 1/5 the FDI in China.   

Sources:  GEI, Wall Street Journal and China Economic Review.