Chinese foreign direct investment: What's happening behind the headlines?

The much-denied hard landing in China is now underway with weakening data everywhere one looks. Today there is More Bad News For China as FDI Falls. Foreign direct investment in China fell to the lowest level in two years in July, fueling concern that waning confidence in the nation’s growth prospects may restrain any economic rebound.

Few would dispute China’s importance to the world economy today; from small villages to large cities, its presence is now felt almost everywhere. The Economist recently went so far as to call China “the indispensable economy,” reporting that more and more multinational companies are realizing an increased share of their revenues from inside Chinese borders.

The Chairman of China Securities Regulatory Commission (similar to the US SEC) said that China can increase by 10-fold the size of the two main channels by which foreign investors buy mainland financial assets.    It can, Guo Shuqing said, increase quotas under the Qualified Foreign Institutional Investors and the Renminbi Qualified Foreign Institutional Investors.  The latter would make it easier for the yuan in Hong Kong (CNH) to be used to purchase Chinese securities.    

CNN Money reports Chinese buying of U.S. business at record pace Chinese direct investment in the United States could hit a record high in 2012, according to a new research report released Wednesday. Total Chinese foreign direct investment in the U.S. is on pace to reach at least $8 billion this year, according to the report from research firm Rhodium Group.

This morning, Secretary Locke addressed the Asia Society Center on U.S.-China Relations and the Woodrow Wilson Center’s Kissinger Institute on China. The groups today released a new study that shows Chinese foreign direct investment in America doubling in each of the last two years. Chinese investors now have investments in at least 35 of our 50 states, across dozens of industries, employing thousands of Americans. Locke welcomed this news, but also noted progress the U.S. needs to see from Beijing to improve the business environment for American companies trying to invest or expand into China. He said, “When it comes to market access problems for foreign companies, the issues may be different, but the fundamental problem often boils down to the distance between the promises of China’s government and action.”

By Tatiana Didier, Research Economist, Office of the Chief Economist for Latin America and the Caribbean, World Bank, and Sergio Schmukler, Lead Economist at the World Bank. Originally published at VoxEU.

Sunshine Oilsands Ltd., the first Canadian oil-sands operator to list shares on the Hong Kong exchange, is in “advanced” talks with joint-venture partners to boost production to a potential 1 million barrels a day. Sunshine, whose shares slumped 47 percent to the lowest close yesterday since its Hong Kong trading debut last February, is in conversations with “more than two and less than 10” investors, Chief Executive Officer John Zahary said in an interview.

Following on the heels of renewed concern over Europe’s debt situation, China released its monthly economic data. Fixed asset investment, industrial production and retail sales all rose in April, yet growth was not as strong as analysts anticipated. “Weak” is the word to describe China’s April figures, says CLSA’s Andy Rothman in his Sinology Report.