China’s Foreign Direct Investment Falls

Foreign direct investment in China fell last month from a year earlier, the first decline since 2009, and a survey indicated that manufacturing may contract for a second month. Investment slid 9.8 percent to $8.76 billion, after rising 8.8 percent in October, the Ministry of Commerce said in a statement in Beijing today. A preliminary reading of 49 in December for a purchasing managers’ index from HSBC Holdings Plc and Markit Economics compared with a final 47.7 in November. A number below 50 points indicates a contraction. Europe’s debt crisis and global financial turmoil may prompt more cuts in banks’ reserve requirements in China by limiting inflows of cash from abroad. Moody’s Investors Service said today that it’s maintaining a negative outlook on Chinese property developers because government curbs will mean slowing sales, tight bank credit and pressure on prices and profits. “There should be one more cut in reserve ratios in December,” Liu Li-Gang said. The central bank announced the first reduction in three years on Nov. 30, the day before the HSBC PMI indicated the biggest contraction in manufacturing since March 2009.