This quarterly review is a comprehensive overview of China’s current macroeconomic and inbound investment situation. This review offers analyses of major economic indicators, overall trends in foreign direct investment, and discusses major inbound merger and acquisition deals for the first three quarters of 2012. In the third quarter of 2012, Chinese economic growth continued to slow. Although there is presumable weakness in the latest GDP growth number, and other primary third quarter indicators are still in decline, there are signs of stabilization and positive leading market indicators of future growth. With the further implementation of fiscal and monetary policy, the Chinese economy should pick up in the short to medium term, and a U-shaped reversal can be expected. In the first three quarters of 2012, foreign direct investment (FDI) flows into China saw a 3.8% decline from the same period one year ago. The decline in FDI is mostly due to stagnant global economies from abroad and lower tolerances for risk and capital investment. Other emerging and developing markets are attracting FDI growth rates at a faster pace than China. This is partly due to a favorable local cost structure in those particular markets and partly due to total FDI flows that are substantially lower from these countries.
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