China's foreign direct investment (FDI) inflows fell 3.4 per cent in the first eight months of the year versus a year ago, the longest run of decline since the 2008/09 financial crisis, as global economic headwinds held investor spending plans at bay.

China drew US$75 billion (S$91.8 billion) in FDI between January and August, with last month's inflow down 1.43 per cent on a year ago at US$8.3 billion.

Commerce Ministry data showed investment inflows from the European Union, China's single biggest export market, dropped 4.1 per cent on year in the first eight months, while investment by United States firms fell 2.85 per cent.

FDI inflows from the top 10 Asian economies, including Hong Kong, Japan and Singapore, fell 5 per cent between January and August versus a year ago.

China's leaders, following a political transition set to begin this year, may take further steps to support growth including measures to boost domestic investment and consumption, said Ms Joy Yang, Chief Greater China Economist at Mirae Asset Securities.

Given the size of foreign investment relative to the economy, the effect on China's slowdown "will be more in a sentimental rather than material sense", she added.

China's central bank and commercial banks sold a net 17.4 billion yuan (S$3.4 billion) in foreign exchange last month, an additional sign that investors may be reducing their exposure after years of surging inflows.

China drew a record US$116 billion in FDI last year. The Commerce Ministry aims to attract an average of US$120 billion in each of the next four years. It is roughly on course to hit the target in 2012.

China's outbound direct investment from non-financial firms in the first eight months totalled US$47.7 billion, up 39.4 per cent year on year, the ministry said.

TODAY