Chinese foreign direct investment up sharply

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SHANGHAI, Mar 12 (AFP): Foreign direct investment into China jumped 75.2 per cent in January and February from a year ago, the government said Wednesday, as Asia's number two economy remained a top investment destination.
Foreign investment in the first two months of the year, calculated together due to the distorting effects of the Lunar New Year holiday, hit 18.1 billion dollars, the commerce ministry said in a statement.
In February, actual foreign direct investment stood at 6.9 billion dollars, up 38.3 per cent over the same period last year, while in January it rose 109.8 per cent to 11.2 billion dollars.
Capital from US-funded companies increased 43.7 per cent, while fresh capital inflows from the European Union region surged 109.9 per cent.
The sharp uptick in overall investment, however, sparked some concerns of a fresh surge in hot money inflows as higher interest rates and the pace of appreciation in the Chinese currency has picked up over the past four months.
"It's my feeling that there may be hot money flowing into the country in the form of direct foreign investment," said Wang Qian, a Hong Kong-based economist with JP Morgan.
China raised interest rates six times last year, as it aimed to brake economic growth, which hit a 13-year high of 11.4 per cent in 2007.
But turmoil in global equities was sparked by a mortgage- induced credit crisis in the US where regulators have slashed interest rates sharply.