CHINA> National
FDI grows 45% in 1st 7 months
Updated: 2008-08-13 13:22

BEIJING -- China saw a growth of almost 45 percent in foreign direct investment (FDI) actually used in the first seven months of this year, due partly to high interest from overseas investors, the Ministry of Commerce said on Wednesday.

But analysts said it should not rule out possibility for short-term speculative capital, or hot money, rushing into the mainland through Hong Kong.

From January to July, China approved the establishment of 16,891 overseas-funded enterprises, a decline of 22.15 percent from the same period last year. However, the FDI actually used nationwide amounted to $60.724 billion, up 44.54 percent.

Mei Xinyu, a researcher with the ministry's research institute of foreign trade and economic cooperation, said the growth in FDI and the fall in the number of overseas-funded businesses established indicated the per project average FDI used had increased substantially.

Analysts said foreign capital was shifting from the manufacturing sector to the service sector and new-technology and high-tech projects.

Meanwhile, as Wang Chao, assistant to the commerce minister, pointed out, more foreign funds poured into central and western regions. In the first half, the central region doubled FDI it used, while the western region recorded a 140-percent growth.

Analysts also noted that it was possible for large amounts of hot money to contribute to the fast growing FDI through Hong Kong, which accounted for 40 percent of the FDI nationwide.

The commerce ministry said that in the first half year, of the FDI actually used nationwide, $23.39 billion came from Hong Kong, up 94.5 percent year-on-year.