Recent statistics released by the Ministry of Commerce show that actual foreign direct investment (FDI) in the Chinese mainland dropped significantly in January, down 32.67 year on year. It was the fourth straight monthly decline.

In context of the ongoing global financial crisis, and given last January's drastic FDI growth rate and this year's seven-day Spring Festival holiday, the 32.67 percent FDI slump is by no means a source of pessimism.

However, some emerging trends in the country's FDI development deserve special attention.

According to the ministry statistics, just 1,496 new foreign-funded enterprises acquired the green light from authorities in the Chinese mainland in January, down 48.73 percent from the same period last year. This is a clear indication that the volume of FDI flowing to industrial development is declining drastically.

Such trends actually began emerging in 2006 when some China-based FDI was allocated to other developing nations, especially Association of Southeast Asian nations (ASEAN) members. A continuing FDI slump has not stopped the flow of vast amounts of international hot money to China via FDI.

It is known that China's high-pace economic growth in the past decades has been closely related to FDI. However, a rapid FDI flow has also caused some problems for the fast-growing economy.

Closely related to international trade, FDI has long centered on the country's export-bound processing trade, which has for many years accounted for the lion's share of foreign trade volumes. Such a model is key to China's ever-expanding trade surplus. Statistics show that the export of foreign-funded enterprises has long accounted for about 60 percent of the country's total trade value, with the ratio on the increase. As the result, the country's economy has been under-growing certain factors, stemming from its frictions with major trading partners and fluidity excess to a looming risk for inflation.

Considering domestic deposit volumes have exceeded investment, the country's growing demand for FDI fully demonstrates some systemic defects existing in its capital market and banking and interest rate arrangements. Due to these problems, the enormous total of domestic deposits cannot be freely converted into much-needed domestic investment. As a result, investment excess occurred in some certain fields while foreign funds are badly needed to make up for their investment insufficiency.