China's FDI up 8% in January-June on M&A

Foreign investment into China rose 8.0 percent in the first half of this year as mergers and acquisitions by overseas companies more than quadrupled in value, the commerce ministry said Tuesday.

Foreign direct investment (FDI), which excludes financial sectors, totalled $68.41 billion in January-June , the ministry said. "Both the proportion and the transaction value of foreign mergers and acquisitions increased sharply," it said in a statement.

It gave the value of M&A activity at $13.19 billion, a gain of 336.5 percent from the same period last year, while its proportion of total FDI ballooned from 4.8 percent to 19.3 percent.

"With the increase of China's land prices and other costs, many companies are now investing in the country in the form of mergers and acquisitions," said Shen Danyang, ministry spokesman.

Shen did not provide details on any individual deals in China.

In June alone, FDI growth slowed sharply to 1.1 percent, after a 7.8 percent year-on-year rise in May.

The ministry also said overseas direct investment (ODI) from China rose 29.2 percent to $56.0 billion in January to June. It did not provide data for June alone.

China drew a total of $119.6 billion of FDI in 2014, up 1.7 percent, while ODI was up 14.1 percent at $102.9 billion, passing the $100 billion mark for the first time as Chinese companies eye opportunities abroad as domestic growth slows.

The world's second-biggest economy expanded 7.4 percent last year, the weakest pace since 1990, and slowed further to 7.0 percent in each of the first two quarters this year.

In the January-June period, investment from the 28-member European Union (EU) into China rose 13.7 percent to $4.08 billion, the ministry said.

Investment from France, which is included in the EU total, rose 46.9 percent to $660 million. From Japan, with which China is in disputes over territory and wartime history, it fell 16.3 percent to $2.01 billion.

And it fell sharply from the United States, dropping 37.6 percent to $1.09 billion, the figures showed.

Hong Kong is by far the biggest investor in China, accounting for $50.69 billion of the six-month total. It showed a gain of 15.6 percent during the period.

FDI growth has slowed in recent years owing to factors including rising costs, competition from Southeast Asian countries, and concerns over official investigations into foreign companies.

At the same time China's acquisition of foreign assets, particularly energy and resources, has increased with firms encouraged to invest abroad to gain market access and international experience.

Outbound investment from China into the US rose 30.1 percent in the first six months, but gained just 1.9 percent into the EU, the ministry said, without giving totals.

The ASEAN group of Southeast Asian countries saw investment from China rise by 92.9 percent, the ministry said, while that to Hong Kong gained 71.8 percent.

Investment to Japan during the period increased 25.0 percent year-on-year to $100 million, the ministry said after the briefing.