Foreign direct investment (FDI) in China soared between January and April on the back of investor confidence in a strong domestic economy and the country's entry into the World Trade Organization (WTO).

Meanwhile, the country's trade volume in the first four months of this year reached US$174.52 billion, up 10.5 percent from the same period last year, the General Administration of Customs (GAC) said on Wednesday.

China made use of US$14.1 billion foreign direct investment in the first four months of this year, registering a 29.06 percent increase on comparable months last year, according to the Ministry of Foreign Trade and Economic Cooperation (MOFTEC).

Contracted foreign direct investment increased 5.10 percent year-on-year to US$21.3 billion during the period.

Analysts attributed the big increase in actual foreign direct investment in China largely to the country's recent WTO entry.

Starting this year, China is to open up its service sectors to foreign investors in accordance with its WTO commitments.

These include telecoms, banking, insurance, tourism and trading, which foreign investors have long coveted but which have largely remained State monopolies.

China's WTO membership boosted foreign investor confidence in the market with heightened expectations of transparency, stability and predictability in Chinese trade and investment policies and an improved business environment, said Long Guoqiang, a senior researcher with the Development Research Centre of the State Council.

Robust economic growth in China is also a major attraction to foreign investors at a time when the world economic outlook is gloomy, he said.

China's economy is still projected to increase 7.5 percent year-on-year this year despite slack external demand owing to a recession in the United States economy and stalling Japanese recovery.

Long said he expected China to remain the destination of choice for foreign investment in Asia, although many companies are tightening their capital budgets under the double pressures of the economic slowdown and the decline in capital markets.

There may be a leveling or modest decline in newly committed foreign investment in China in the first half of the year compared to the same period in 2001, he said.

Companies with multiple facilities or those that have already committed capital are more likely to sustain their investment programs than companies localizing their operations in China for the first time.

Re-investment and investment in existing projects are more likely to grow than new schemes, said Long.

China had approved the establishment of 388,945 foreign-invested companies in the country at the end of April, with contracted foreign capital of US$766.6 billion and a total of US$409.4 billion actually used, according to MOFTEC statistics.

On foreign trade, GAC figures show that exports in the January-April period rose 12 percent to US$91.38 billion and import grew 8.8 percent to US$83.14 billion, leaving a trade surplus of US$8.24 billion.

In April, the trade volume hit a record high of US$52.48 billion, a year-on-year increase of 17.5 percent.

Of the total, exports were valued at US$26.73 billion, up 17.2 percent, while imports reached US$25.75 billion, up 17.8 percent. The month's trade surplus was US$0.97 billion.

In the four months, primary product exports increased at a higher speed and primary product imports started to grow. The trade volume in this regard reached US$74.85 billion, up 6.3 percent.

Processing trade volume in the four months reached US$84.97 billion, jumping 15.2 percent, with export up 12.4 percent to US$50.6 billion and import up 19.6 percent to US$34.37 billion.

China's steady economic growth, accession to the WTO and trade promotion measures, as well as the robust recovery of the US economy and growth of the world economy and trade contributed to the growth, experts said.

(China Daily May 16, 2002)