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Beijing (AFP) Feb 17, 2011 Foreign direct investment in China rose 23.4 percent in January from a year earlier, the government said on Thursday, despite an official campaign to stem liquidity and control inflation. China attracted $10.03 billion in foreign investment last month, commerce ministry spokesman Yao Jian told reporters. The figure indicated continued revival in investment after growth slowed sharply in August and despite moves by the government to slow the economy -- including last week's third interest rate hike in four months. The January figure compares to growth of 15.6 percent in December, when $14.03 billion in investment flowed into China. Foreign direct investment (FDI) hit a full-year record of $105.7 billion in 2010, the government said last month, reflecting growing foreign confidence in the economy despite Beijing's dampening measures. Investment by overseas companies last year rose 17.4 percent year-on-year, with more than a fifth of the money flowing into the booming property sector, Yao said last month. Analysts say strong growth in the world's second-largest economy and expectations for a stronger currency have attracted a growing number of foreign investors to China, hoping for a better return on their money. But the government, alarmed by soaring food and property prices, has been trying to reduce the volume of money flowing into the economy as inflation continues to soar. Figures released Tuesday showed January's annualised inflation remained high at 4.9 percent, despite adjustments to the consumer price index that reduced the weighting of soaring food costs. "China's internally-driven economic growth momentum remains very strong" despite government tightening measures including interest rate hikes, said Ren Xianfang, IHS Global Insight's analyst in Beijing. "It is a consensus that the appreciation of the Chinese currency will certainly accelerate this year as it is an important part of the tightening, which will (make China) even more attractive to foreign capital," she said. China's foreign direct investment data include investment by overseas companies in industries such as manufacturing, real estate, services and agriculture but exclude money put into banks and other financial institutions. The State Council, or cabinet, announced Saturday it would vet proposed mergers and acquisitions by foreign firms to "safeguard national security", a move that could complicate business dealings in the country. A panel is being established that would examine foreign investment in areas pertaining to national defence, agriculture, energy, resources, infrastructure, transport, technology and equipment manufacturing, it said. But Ren expected FDI to grow steadily this year, saying the security measure was unlikely to have a significant impact because China already tightly controls investment in the sectors named.
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