Foreign direct investment (FDI) in China rose more than 10 per cent in January, indicating a good start for this year.

According to statistics from the Ministry of Commerce, realized FDI that flowed into China reached US$4.1 billion in January, up 10.7 per cent compared with the previous year.

And contractual direct investment in China, an indicator of future investment flows, increased some 27.7 per cent to more than US$12.8 billion.

The ministry also said the country approved 3,563 new foreign-funded companies in the first month of this year, reflecting an increase of more than 22 per cent year-on-year.

Experts said the figures indicated that China's FDI is continuing the same fast track as last year.

China, seen as the fastest growing economy of the world, attracted an actual FDI of over US$60.6 billion last year, up around 13 per cent from a year earlier. The figure made the country the largest investment destination in the world.

An economist with Deutsche Bank in Hong Kong predicted that China would obtain an annual FDI growth rate of more than 10 per cent in 2005.

Experts contributed the high growth rate to the sound investment environment and rapid economic growth.

China, in line with its commitments to the World Trade Organization (WTO), has lifted some restrictions on foreign investment in various industries, including transport, distribution and franchising, at the third anniversary of its WTO membership.

The moves greatly spurred foreign investors' enthusiasm to tap the lucrative Chinese market of over 1.3 billion consumers.

In order to cash in on the low labour cost and preferential policies in China, an increasing number of foreign ventures, particularly small and medium-sized enterprises, are planning to launch their businesses here this year, experts said.

And a number of foreign companies, which have already gained a foothold, expressed in their new-year plans that they would increase their investments in the country. "China is the best market to invest in," said Lorne Nystrom, an official of the Canada-based A1 Soybean Enterprises.

Source: China Daily