The flow of foreign direct investment (FDI) into the Chinese mainland increased by nearly 13 percent to US$60.6 billion last year, the Ministry of Commerce said on Thursday.

They interpreted the figure as indicating that most foreign investors shrugged off fears that the economy, which remains overheated in some sectors, will have a hard landing.

Chong Quan, the ministry's spokesperson, said 700 research and development centers had been set up on the mainland by foreign companies and 30 multinationals had also chosen it for their regional headquarters.

Industries such as equipment manufacturing and electronic machinery attracted most of the foreign investment and, though cooling measures did not affect overall figures, Chong said actual FDI in some overheated industries slowed.

The number of newly approved foreign-funded companies in the steel industry fell by 53 percent, while contracted investment dropped 9 percent.

Actual and contracted foreign investment in the cement industry sunk 67 and 74 percent respectively. No foreign investment was made in the aluminum industry last year.

Chong said the northeast was the driver of FDI inflow; actual and contracted investment increased by 78 and 40 percent respectively in the region, where the central government is currently engaged in a strategy of rejuvenation.

Japan, the US, British Virgin Islands and South Korea were among the top sources of FDI.

In December, actual FDI totaled about US$3.1 billion, a fall of more than 51 percent year-on-year, but contracted investment rose 26.7 percent to US$18.4 billion.

Jin Bosheng, an expert from the Chinese Academy of International Trade and Economics, stressed that last month's drop in actual foreign investment does not hint at a slowdown for next year, as foreign companies are usually reluctant to make investments at the end of the year.

"Momentum remains robust," he said, and the level of contracted foreign investment shows a lot of money waiting to flow into China.

Total contracted FDI reached US$153.5 billion in 2004, up 33.4 percent on the previous year.

(China Daily January 14, 2005)