Investment in China Drops As U.S. Drags

From Reuters over Finance Yahoo:

Foreign direct investment growth in China fell year-on-year for the first time in 28 months, with November's $8.8 billion of commitments down 9.8 percent and hurt by a sharp drop in inflows from the United States, Commerce Ministry data showed Thursday.

The fall -- the first since July 2009's 35.7 percent year-on-year collapse to $5.4 billion -- saw year-to-date FDI flows ease to 13.2 percent from 15.9 percent previously, bringing the total to a robust $103.8 billion and still leaving 2011 poised to be a record-breaking year for FDI.

The slowdown in the rate of FDI growth comes on top of recent data which showed the first net capital outflow from China in four years in October, part of a recent trend of capital flight from emerging markets largely inspired by Europe's festering debt crisis.

But he noted that rising costs in China and a slowdown in the global economy were forcing some low-end manufacturers to relocate to other regions.

"For those that rely heavily on cheap labor as an advantage, China may seem to be an increasingly unwelcoming place," he said.

Economists say fine-tuning of economic policy towards a pro-growth setting is already under way. Data showed Chinese banks made 562 billion yuan of new loans in November, a shade more than forecast as Beijing gently eases tight credit conditions.
Bank lending is a focal point in China's monetary policy as it is controlled by the government to steer economic growth and control inflation.

Inflation appears to be coming off the boil, having fallen from a three-year high of 6.5 percent in July to 4.2 percent in November, but stability-obsessed Beijing is wary of any policy that might fire up prices again.

Periods of high inflation have historically been accompanied by periods of social tension, making the leaders of China's ruling Communist Party particularly sensitive to sharp price rises or a sudden erosion of consumer spending power.

http://finance.yahoo.com/news/china-fdi-flows-stumble-november-044037193.html?l=1