China to see investment slide: JETRO

BEIJING (Kyodo) Japanese investment in China, which dropped in the first half of 2007, is unlikely to pick up in the near future as manufacturers scale down investments in the country, a Japanese trade organization said Thursday.

Even as overall overseas Japanese investment more than doubled in the January-June period, that to China dropped 11.2 percent from a year earlier to ¥342.8 billion in the same period, a report by the Japan External Trade Organization’s Beijing office says.

The drop comes after a sharp rise in Japanese investment in China in the first half of this decade, particularly after the country’s entry into the World Trade Organization in 2001. “Manufacturers’ initial investments to China have been all but completed, and those in the future will be for enlarging existing facilities or for sales, so a major increase in the near future is not expected,” the report says.

While investment in such fields as wholesale and real estate is showing signs of an increase, “the amounts involved in each case are small, so they have not reached a point where they will cover the drop in the area of manufacturing,” the report says.

The report adds that Japanese manufacturers are also diversifying investment destinations to hedge risks.

In contrast to the drop in Japanese investment in China, that in Southeast Asia from January to June shot up 72.8 percent from a year earlier to ¥427.5 billion, while that in India quadrupled to ¥107.3 billion, the report says.