FDI Shuns China as Microsoft/Apple Face Probes

Foreign direct investment into China, a gauge of external confidence, slumped to a four-year low amid antitrust probes into multinational companies that have spurred a letter of complaint from the U.S.

Inbound investment was $7.2 billion in August, down 14 percent from a year earlier, the Ministry of Commerce said on 16 September in Beijing after a 17 percent drop in July. It was the first back-to-back decline of more than 10 percent since 2009.

U.S. Treasury Secretary Jacob J. Lew said in a missive to Vice Premier Wang Yang that China is using competition law to force companies to cut prices its consumers pay for products relying on foreign intellectual property.

‘No Relation’

The July and August declines in FDI have “no relation” to China’s anti-monopoly measures, Shen Danyang, a Commerce Ministry spokesman, said at a briefing in Beijing on 16 September without elaborating, according to a transcript on the ministry’s website. China can still attract $120 billion in inbound investment in 2014, he said at a separate briefing.

Lew’s complaint follows criticism from the main U.S. and European business lobbies in China that authorities in the world’s second-biggest economy are discriminating against non-Chinese corporations. Dozens of foreign companies are being targeted in probes, with regulators opening an anti-monopoly investigation into Microsoft Corp. in July and state media accusing Apple Inc. of using its iPhone to steal state secrets.

Volkswagen AG’s Audi, Bayerische Motoren Werke AG, Daimler AG’s Mercedes-Benz, Tata Motors Ltd.’s Jaguar Land Rover, Fiat SpA’s Chrysler, Toyota Motor Corp. and Honda Motor Co. have all announced price cuts of vehicles or spare parts since July in the wake of probes.

General Motors Co. said last month that its joint venture with SAIC Motor Corp. has been responding to regulator requests since 2012.

Authorities raided the offices of software maker Microsoft in July, while Qualcomm Inc. and Mead Johnson Nutrition Co. have also fallen under anti-monopoly scrutiny in China.