When making use of foreign investment, the more is no longer the better.

As a champion magnet for overseas investors, China has absorbed more foreign direct investment (FDI) in the past 15 years than any other developing country - and also outdid all developed economies except the United States and Britain last year.

It is more than likely that this will remain the case this year. However, a slight drop in materialized FDI will give the country a chance to refocus its efforts on attracting the most-desired investments.

According to the 2006 World Investment Report, released on Monday by the United Nations Conference on Trade and Development, China was the world's third-largest FDI recipient in 2005 with a total inflow of US$72.4 billion, including US$60.3 billion in non-financial sectors and US$12 billion to the banking sector.

Meanwhile, the country's materialized FDI in the non-financial sectors fell by 1.52 per cent year-on-year to US$42.5 billion in the first three quarters of the year.

Slowing FDI growth might be what policy-makers are expecting as the country's foreign exchange reserves fast approach the US$1 trillion mark, the highest of any nation.

The rapid rise in foreign currency reserves is largely caused by the surge of the country's trade surplus. Yet, the continuing inflow of FDI also contributes to the stockpiling of foreign exchange reserves.

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