Investment in China Slides

Premier Wen suggests room for easing after report shows outflow of capital.

Foreign direct investment in China fell to the lowest level in two years in July, fueling concern that waning confidence in the nation’s growth prospects may restrain any economic rebound.

Investment declined 8.7 percent from a year earlier to $7.58 billion, the eighth drop in nine months and the smallest inflow since July 2010. The Ministry of Commerce released the data at a briefing in Beijing today.

Wen’s View

“In the recent months, especially since July, there are some positive changes in the economy,” said Wen, 69, as cited by state television. Domestic demand is showing greater effect in supporting economic growth, industrial output in eastern regions is picking up and the job market is stable, he said.

‘Central Concern’

“Policy makers have made clear in recent weeks that supporting economic growth is their central concern,” Qinwei Wang, an economist at Capital Economics Ltd. in London, said before today’s release. “We continue to think that more policy support will be announced soon, including a further cut to the required reserve ratio, and that more infrastructure projects proposed by local governments will be given the go-ahead.”

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