Foreign direct investment (FDI) in China fell by three per cent in the first half of the year as the global economy slowed, the commerce ministry said Tuesday.

Foreign companies invested US$59.1 billion in factories and other projects in China from January to June 2012 -- well below the US$60.89 billion spent in the same period last year -- said ministry spokesman Shen Danyang.

"The pace of the world economic recovery remained slow, and many uncertainties persisted. In particular, the EU debt crisis has yet to be resolved," Shen told reporters.

Increased Chinese production costs and a tightening in property policy had also contributed to the decline in first-half FDI, he added.

China's economy expanded at its slowest pace in more than three years during the second quarter of 2012 as dire problems overseas started to hit home, according to official data released on Friday.

In June alone China's FDI fell by 6.9 per cent year-on-year to US$12 billion, despite a slight rebound in investment from the debt-ridden European Union.

EU countries invested a total of US$3.52 billion in China in the first half, up 1.6 per cent on the same period in 2011, compared with a 5.1 per cent fall in the first five months of the year.

But Investment from 10 Asian nations and territories including Hong Kong, Macao, Japan and the Philippines was down 2.8 per cent year-on-year at US$51.07 billion, while US investment fell 3.2 per cent to US$1.63 billion.

channelnewsasia.com