(Xinhua)
Updated: 2008-06-12 19:12

BEIJING - China used US$ 42.78 billion of foreign direct investment (FDI) in the first five months this year, an increase of 54.97 percent from the same period last year, the Ministry of Commerce (MOC) said Thursday.

The growth was lower than a year-on-year growth rate of 59.32 percent used in the January-April period this year.

Meanwhile, the number of newly-approved foreign-funded enterprises shrank 20.95 percent to 11,915 in the first five months.

"The quality of China's FDI use has improved as a raft of new measures were introduced to regulate foreign investment," said Hao Hongmei, an analyst with the Academy of International Trade and Economic Cooperation under the Ministry of Commerce.

Foreign companies now tend to have more interest in investing in high-tech and high-value sectors, which need vast financial input, than in labor-intensive and lower-value industries, Hao said.

China began to level the corporate income taxes for foreign companies with that of domestic companies from January. It also published a new catalogue last year to encourage overseas investment in high-tech and environment-friendly projects.

The actual use of FDI in May jumped 37.94 percent from a year earlier to 7.76 billion yuan and the number of newly-approved foreign-funded enterprises dropped 10.94 percent to 2,425.

"China remained a favorite destination for overseas investment, especially big investors like the top 500 multinationals," Hao said.

Commerce Minister Chen Deming said earlier in a press conference that the steadily-increasing FDI reflected the optimism of foreign companies about their returns from the Chinese market and their intention to accelerate investment in the country to profit from the appreciating Chinese currency.

China's currency, the yuan, on Thursday ended a short-lived downward adjustment to break the 6.91 mark, setting a new high against the US dollar since the country de-pegged its currency from the greenback in July 2005.