IS RISING FDI IN CHINA A SIGN OF IMPROVING OVERSEAS CONFIDENCE?

HONG KONG – Foreign Direct Investment inflow to China in June jumped by 20.1% on-year, the fifth straight month to show gains. For the second quarter, FDI inflows increased by 8.3% y/y, from 1.4% in Q1 and a fall of 3.7% in calendar 2012. FDI to the service sector (12.4% ytd y/y) has outperformed the manufacturing sector (down2.1% ytd y/y), a further sign of increasing services output as a share of GDP. Outward FDI (non-financial sector) also remains resilient, growing by 28.7% y/y ytd (vs. 12.6% in 2012).