Foreign direct investment (FDI) has been declining for eight consecutive months.  This is the first time that consecutive FDI decline has happened since the Asian financial crisis in 1998.

China's FDI in May dropped 17.8% from a year earlier to $6.38 billion, and the number of newly approved foreign enterprises contracted by 32% to 1,649;  from January and May, the FDI fell 20.4% year-on-year to $34.05 billion and newly approved foreign enterprises dropped by 33.8% to 7,890, according to a release by the Ministry of Commerce. 

As can be seen from the following charts, the decline trend has been clear for the last several months, either measured by the dollar amount of FDI or by total number of foreign companies registered every month.  To reverse the trend, government may relax rules on FDI.  An official from the Ministry of Commerce confirmed to China Daily that a plan to relax some restrictions on foreign investment has been drafted, particularly in the real-estate sector.

The proposal that has been submitted to the State Council lists 42 rules covering taxation, foreign exchange and regulatory supervision, and calls for an easier approval process for foreign investment, China Times reported on the weekend.