China used US$9.71 billion of foreign capital from January to February, 13.04 percent up on last year, said the Ministry of Commerce on Tuesday.

During this period, the country approved the establishment of 5,716 foreign-funded enterprises, up 11.29 percent, said the ministry.

The statistics were released as a draft corporate income tax law awaits a final vote by Chinese lawmakers, aimed at setting a unified income tax rate for domestic and foreign companies at 25 percent to give the competitors a level playing field.

Currently, the actual average income tax burden on Chinese companies is 25 percent, while that on foreign enterprises is 15 percent.

The proposed unified company income tax will have little effect on foreign investment, Bert Hofman, World Bank (WB) chief economist for China, has said.

He said China's rate remains attractive for foreign investment, while the country is competitive in other factors such as infrastructure, government efficiency and labor costs.

In the first two months, the Chinese mainland used 12.05 percent more capital than a year earlier from ten countries and regions in Asia, including the two regions of Hong Kong and Macao and Taiwan.

Hong Kong was the top investor in the Chinese mainland, investing US$2.95 billion in the January-February period, followed by the British Virgin Islands and Japan.

The top ten countries and regions with investment in the Chinese mainland accounted for 86.7 percent of the total used foreign capital, according to the ministry.

The United States ranked sixth with US$448 million of actual investment in the mainland from January to February, a 15.8-percent rise year on year.

As of the end of 2006, China had approved the establishment of more than 590,000 foreign-funded enterprises and used US$685.4 billion of foreign capital.

(Xinhua News Agency March 14, 2007)