Foreign direct investment (FDI) in the Chinese mainland slipped again over the first seven months of the year.

The mainland attracted US$33.1 billion in FDI from January to July, reflecting a 3.42 per cent fall from the previous year, according to statistics published Monday by the Ministry of Commerce.

However, contracted direct investment on the mainland, an indicator of the future trend of investment, rose about 19.23 per cent to US$98.6 billion.

During the period, the ministry said, the mainland approved 24,652 new foreign-invested ventures, 2.02 per cent down year on year.

Specific figures for July alone were not available, but, based on calculations from the official figures, FDI last month totalled US$4.5 billion, flat from a year earlier.

Although the growth rates of realized foreign investment and contracted foreign investment have both declined in the past seven months, this does not mean overseas investors are no longer keen on investing in the mainland, said Lu Jinyong, an investment researcher at the University of International Business and Economics.

"We cannot judge the growth of FDI with figures from several months," he said.

The global economic slowdown this year, combined with China's recent currency reform, is expected to have certain impacts on the mainland's FDI.

The 2 per cent appreciation of renminbi, which cuts the competitive edge previously enjoyed by China's export companies, is predicted to influence foreign investment in the mainland.

However, Lu said not many foreign investors would withdraw from the Chinese mainland.

"When they map out their global strategy, they cannot neglect the Chinese mainland," he said.

"We must notice that this year's FDI volume was achieved on the huge base of 2004."

The mainland chalked up a record US$61 billion in foreign investment in 2004, a rise of about 14 per cent from 2003.

Source: China Daily