Fat Cats Take Their Money to China
Just after President Obama gave a tongue-lashing to America’s bankers for failing to invest in the U.S., Beijing let it be known where the world is investing. Chinese authorities announced that for the fourth straight month foreign direct investment in China continues to rise.
Foreign direct investment (NYSE:FDI) was down sharply during the worst of the global recession. Now that trend has clearly been broken.
The latest jump in FDI is an eye-popping 32 percent increase over last year.
Investment in China rose to $7.02 billion in November according to the Ministry of Commerce. The 32 percent jump in foreign investment last month compares with a mere 5.7 percent increase in October.
Who’s pouring all of this new money into China? The foreign inflow is no longer dominated solely by the U.S. and Europe. In fact American and European investment in China continues to be down for the year.
The hotspot is Asia. Inflows are coming from Japan, Singapore and the countries in the Association of Southeast Asian Nations (ASEAN), according to Beijing. The growth centers in China for foreign investment are the thriving coastal provinces of Jiangsu, Guangdong, and Liaoning as well as the booming inland province of Chongqing.
Investment from the United States and the European Union both dropped 38 percent in November from a year earlier. But inflows from Association of Southeast Nations surged almost 60 percent year-over-year.
China’s relentless growth is clearly helping to drive a regional recovery. In turn, Asian economic expansion is fueling a return of investment to China.
We are expecting China to bounce back to double-digit growth when GDP expansion numbers are announced for the fourth quarter.
Foreign direct investment shows that the world agrees. The place to invest in today’s economic climate is China.
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Disclosure: Association of Southeast Asian Nations (ASEAN), China Stock Diges