China became the world's largest foreign direct investment (FDI) recipient in 2003. The country received US$53.5 billion, despite a three-year decline in global FDI.

The number of cross-border mergers and acquisitions in China increased from 107 in 2002 to 214 last year, contributing to the surge, said the World Investment Report 2004, released by the United Nations Conference on Trade and Development (UNCTAD) Wednesday.

The global flow of FDI continued to slide in 2003, hitting US$560 billion -- the lowest level since 1998 -- and 18 per cent lower than a year earlier.

With inflows of US$107 billion last year, the Asia-Pacific region consolidated its position as the top destination for FDI in the developing world, said the report.

China remains one of the world's most attractive economies. It has led all developing countries for 11 years, said Liao Xiaoqi, China's vice-minister of commerce, during the report's launch ceremony in Beijing.

Liao said foreign funded companies are playing an important role in China's economy, with export value of US$438.4 billion last year, accounting for 55 per cent of the country's total exports.

He ruled out worries that China's on-going macro-economic control will have a negative influence on the FDI, saying the country will "stick to the existing active and effective foreign investment policies."

By the end of last month, there were 494,025 foreign funded firms in China, with a contracted foreign capital of US$1.04 trillion and actual foreign capital of US$545.03 billion, Liao said.

UNCTAD predicted China's FDI inflow will grow to US$60 billion this year, due to the country's fast growing economy and regional co-operation.

Hu Jingyan, director of the Foreign Investment Administration of the Ministry of Commerce declined to comment on the prediction, saying this year's figure will be at least bigger than last year's.

Statistics from the ministry indicate, in the first eight months of the year, FDI inflows hit US$43 billion, up 18.77 per cent.

France and the United States ranked second and the third in FDI inflow last year.

The United States remained the world's largest investor.

UNCTAD's surveys indicate the global investment flows are expected to turn upwards this year, boosted by faster economic growth and improved corporate profitability.