China reported that foreign direct investments fell by over a tenth in July, as the government continues its investigations on the foreign companies.

According to the commerce ministry, long-term investment into China dropped by 16.95 percent to $7.81 billion, the lowest since the country attracted $7.58 billion in July 2012. The seven-month tally reached $71.14 billion, lower by 0.35% from last year.

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The decline comes amid the government's multiple probes on foreign companies that range from auto manufactures to milk makers for allegedly violating the country's competition laws among others, the Agence France Press reported.

Business groups are concerned that the government is singling overseas companies with its probes. The European Chamber of Commerce had already protested the investigations, saying authorities are resorting to intimidation tactics to pressure companies, Bloomberg reported

The Commerce ministry, however, brushed aside the link between the slide in FDIs and the investigations on foreign companies saying the volatility in foreign investments from month to month is normal. In addition, the Commerce ministry remains confident that the investors will not be spooked by the probes and added that all companies should follow the law, and violators should expect to be punished, reported AFP.

Funds from major investors, such as the United States, Japan and the European Union (EU) were all down, but there were improvements in investments from South Korea and Britain. The government expects FDIs to match 2013's 5.3% growth.

While foreign investments into China declined, the world's second largest economy has been stepping up investments to other countries. The Commerce ministry said total foreign investments by China are up four percent to $52.55 billion, with the EU being the biggest beneficiary with nearly a fourfold leap in investment. Inflows to Japan surged 160.9 percent, while the US had a modest 12.8 percent bump in investments.

The ministry expects China's foreign investment to grow 10 percent this year, and exceed the growth of FDIs going into the country moving forward.

TagsChina foreign direct investments