Direct investment in China off in ’12

JIJI

Japan’s direct investment in China slowed markedly in 2012, reflecting heightened tensions between the two nations, Chinese Commerce Ministry data showed Wednesday.

The data also showed that overall foreign direct investment in China fell 3.7 percent from the previous year to $111.7 billion, the first drop in three years, amid increasing concerns about an economic slowdown and higher wages in the country.

Last year, Japan’s direct investment in China increased 16.3 percent to $7.4 billion, with the growth rate sharply lower than the 55.0 percent registered in 2011, according to the data.

Japanese manufacturers had been accelerating moves to transfer production bases from Japan to China due to the yen’s appreciation.

But Japanese firms grew concerned about local business risks in 2012, particularly after the central government effectively nationalized the disputed Senkaku Islands in the East China Sea by buying three of the five uninhabited islets from their Saitama owner in September.

Japan’s direct investment in China is expected to decelerate further, analysts said.