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Foreign investment into China falls 17% to $7.81 billion in July

Amid a crackdown on a host of MNCs over alleged violations of the anti-monopoly laws, foreign investments into China slumped in July by 16.95 per cent from a year earlier to $7.81 billion, the government said on Monday.

The sharp decline, resulting in a two-year low figures, was in contrast with a minor 0.2-per cent increase seen in June, the Ministry of Commerce (MOC) said. Constant reforms helped China remain the biggest recipient of foreign direct investment (FDI) in the last three decades due to liberal investment environment despite being a Communist nation.

However, increasing labour costs and a crackdown on MNCs, including Microsoft, led to a huge commotion among foreign investors who flocked to China till recently. For the first seven months, the FDI, which excludes investment in the financial sector, stood at $71.14 billion down 0.35 per cent from the same period last year.

‘With China speeding up economic restructuring, it is normal for us to have some fluctuations in FDI figures,’ said Shen Danyang, spokesman of the MOC. ‘But such fluctuations are not evidence for changing trends,’ state-run Xinhua news agency quoted Shen as saying. According to the MOC, foreign investors set up 13,249 new companies in the first seven months of 2014, overall up 1.6 per cent from last year, compared with a 3.2-per cent increase in the first half of the year.
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