China's February foreign direct investment inched higher by 6.3%

Finally, a major YoY increase.

According to Moody's, foreign direct investment into China recovered strongly in February, growing 6.3% y/y to US$8.21 billion. This is the first major year on year increase since December 2011 (a 0.04% y/y increase in May 2012 notwithstanding). 

The upturn in China's domestic investment and economic growth cycle may be starting to encourage capital into China.

Gross foreign direct investment into China was $8.21 billion, down from $9.27 billion in January but an increase of 6.3% year on year.

Here's more from Moody's:

FDI into China had fallen every month since December 2011, apart from May 2012. FDI fell 3.7% to $111.7 billion for 2012. The government forecasts a mild 1.2% increase in nonfinancial FDI for 2013.

Outbound FDI jumped 147% y/y to $18.4 billion in the first two months of the year.

February marks a recovery in inbound investment into China. This will be of relief to many government officials who have been wooing foreign investors with tax incentives and other subsidies in recent months in an attempt to reverse the downward trend.

The recovery in investment is a sign that economic growth is picking up and that opportunities for investment are growing.

The economy remains reliant on investment for growth (total investment accounted for almost half of GDP growth in 2011).

FDI remains necessary in China because foreign investors have a greater eye on the bottom line and invest in the expectation of profits, which tends to result in more productive industries and less wasteful investment that can occur under state-owned enterprises.

Incentives to boost investment in advanced industries should also encourage further economic development.