Foreign Investment in China Off Sharply

BEIJING — Foreign investment in China fell sharply in the first half of this year, but an easing of foreign sanctions imposed after last year’s military crackdown should mean growth in coming months, a Chinese official said today.

Liu Xiangdong, spokesman for the Ministry of Foreign Economic Relations and Trade, said that the number of new foreign investment projects approved during the first half of the year fell 8.1% from a year earlier to 2,784 and that their total contracted value slumped 22% to $2.35 billion.

He blamed the slump, which occurred despite a steep rise in investment from Taiwan, partly on what he called distorted reports by Western media on the political unrest last year.

“But as foreign countries are getting a better understanding of June 4, and as the domestic situation is still improving, the general trend is getting better,” he said.

Liu also linked the decline to greater selectiveness by provincial governments in the type of investment they permitted, as well as to an austerity program that succeeded in checking inflation but choked off funds to Chinese and foreign companies.

He quoted ministry statistics as showing imports during the first six months of this year fell 23.7% from a year earlier to $13.33 billion.

Imports from Japan during the first five months slumped 47.8%, while imports from the United States fell 26.8% and those from the European Community dropped 30.7%.

Exports during the January-June period rose 21.7% to $24.5 billion, according to ministry figures.

Liu welcomed Japan’s recent decision to permit lending under a $5.6-billion loan package frozen after the crackdown.

He called on other major industrial nations, which also imposed curbs on official lending to China after the army crushed a pro-democracy movement in Beijing’s Tian An Men Square on June 4, 1989, to lift their sanctions.