China foreign investment, power use rise

SHANGHAI — China’s foreign direct investment and power usage rose in September, in the latest evidence the country’s economic recovery is gaining momentum.

Foreign direct investment in the world’s third-largest economy rose by nearly a fifth in September, to $7.9 billion for the month, the Commerce Ministry reported Thursday.

“The two months rebound shows the confidence of foreign investors in the Chinese economy. With the strong rebound in the domestic economy, I believe more foreign investors will participate in China’s economic development,” ministry spokesman Yao Jian told reporters in Beijing.

Power consumption, viewed by some experts as a key measure of industrial activity, also picked up in September. It rose 10.2 percent to 322.4 billion kilowatt hours, a 2 percentage point rise over August’s 8 percent increase, the National Energy Administration reported.

But power use rose only 1.4 percent over a year earlier in the first nine months of the year, it said. Some of the moderation in power use could stem, however, from efforts to improve China’s energy efficiency.

China’s economic growth rose to 7.9 percent over a year earlier in the quarter ending June 30, up from 6.1 percent the previous quarter, and analysts say the recovery is gathering strength. On Wednesday, the government reported that the decline in exports had moderated in September, falling 15.2 percent in its mildest fall so far this year.

Housing prices also climbed in September, the National Bureau of Statistics reported, rising 2.8 percent in the country’s 70 largest cities. In Guangzhou, a southern export hub near Hong Kong, prices jumped 7.3 percent over a year earlier.

The increase comes amid a construction boom fueled in part by the government’s 4 trillion yuan ($596 billion) economic stimulus program, which has in turn boosted demand for steel, cement and other materials.

“Property investment growth is likely to remain elevated and be a major growth driver for the rest of 2009,” said a Bank of America Merrill Lynch Global Research report issued Thursday.

The government is due to announce other key economic data for the third quarter next week.

Actual foreign direct investment for the first nine months of the year totaled $63.8 billion, a 14 percent decline from the same period of 2008 due to a lull earlier in the year.

The September rise in foreign direct investment compared with a 7 percent year-on-year increase in August, and declines of 35.7 percent in July and 6.8 percent in June.

China is a top investment destination but double-digit growth rates plunged in late 2007 as foreign companies were hit by the global downturn and cut spending. Many are continuing to invest in China to take advantage of its stronger economic growth compared with other countries.

The foreign direct investment figure does not include stocks and other financial assets, which also appear to be attracting strong investment inflows: China’s foreign reserves, already the world’s largest, hit a record high $2.273 trillion by the end of September, the central bank reported Wednesday.

There was a nearly 11 percent increase in the number of newly approved foreign invested companies in September, to 2,217. But the number of new foreign invested companies is still down 21 percent for the year, at 16,348, the Commerce Ministry said.

On the Net:

Chinese Commerce Ministry: www.mofcom.gov.cn

Associated Press researcher Bonnie Cao contributed to this report from Beijing.