Foreign direct investment (FDI) in China dropped 27 percent to US$4.1 billion in April.

However, experts say that this does not mean China is losing its attractiveness to foreign investors.

The ministry said China contracted an FDI of US$17.5 billion from January to April, up 2.24 percent compared with the previous year.

Meanwhile, contracted foreign investment to China during this period - an indicator of future trends - stood at US$50.2 billion, reflecting a year-on-year increase of more than 8 percent.

Although FDI in April decreased by a comparatively large margin, experts said fluctuations over a month were normal and that China would witness steady growth in FDI for the remainder of 2005.

Figures were calculated based on latest official information from China's Ministry of Commerce on Thursday.

Lu Jinyong, a foreign investment researcher with Beijing-based University of International Business and Economics in Beijing, expects that FDIs in China would match or surpass last year's volume, but growth rates are not likely to be as high.

"The growth rate might be around 10 percent," he said.

Lu added, "Statistics covering four months are actually not enough to show the trend of a whole year."

Lu cited figures in 2004 as an example. Although China achieved one of its highest FDI growth rates then, it was largely due to rapid growth only in the latter half of the year.

Lu contributed the slowdown in growth rate to a number of factors.

China became the second largest foreign investment destination in the world last year, attracting an actual FDI of over US$60.6 billion. Prior to that, China had been enjoying growth in foreign investments for a successive four years.

"It is really difficult for China to maintain a high growth rate on such a large base," Lu said.

In addition, government measures to stabilize overheated industries including the steel, cement and aluminium sectors had an impact on foreign investment in these sectors.

Foreign investment in textiles, which is currently in the midst of trading frictions and other restrictions, also declined.

(China Daily May 13, 2005)