China 2012 FDI slips in first fall in three years

BEIJING (Reuters) - China's foreign direct investment inflows fell 3.7 percent in 2012 from a year ago, the first annual drop since the global financial crisis, as world economic uncertainties curbed investor enthusiasm for deals in emerging markets.

The Commerce Ministry said on Wednesday China drew $111.7 billion in foreign direct investment (FDI) last year, down from a record $116 billion in 2011.

FDI is an important gauge of the health of the external economy, to which China's vast factory sector is oriented. But it is a small contributor to China's overall capital flows compared with exports, which were worth about $2 trillion in 2012.

In December, FDI inflows dropped 4.5 percent on the year to $11.7 billion.

The full-year number fell short of the $120 billion the Commerce Ministry had set as a target to attract in each of the four years from 2012 to 2015.

Data from the Commerce Ministry showed investment inflows from the crisis-stricken European Union dropped 3.8 percent in 2012 from 2011, contrasting with investment by U.S. firms which rose 4.5 percent in the same period.

FDI from the top 10 Asian economies, including Hong Kong, Japan and Singapore, fell 4.8 percent last year to $95.7 billion, the ministry said.

Full-year FDI into the service sector fell 2.6 percent to $53.8 billion, while manufacturing sector inflows dropped 6.2 percent on the year $48.9 billion.

Excluding investment in the property sector, however, FDI inflows in the service sector rose 4.8 percent in 2012 from 2011. Investment in the property sector had declined 10.3 percent on the year.

The FDI data followed a stronger-than-expected rebound in exports and imports last month, though the country missed its 10 percent growth target for trade in 2012, underlining the downside risks from the faltering external demand.

To shield China's economy from external uncertainties, Beijing has taken steps to help exporters and importers by speeding up payments of tax rebate, cutting red tape and giving exporters easier access to bank loans.

($1 = 6.2192 Chinese yuan)

(Reporting by Aileen Wang and Koh Gui Qing; Editing by Alex Richardson)