The year-on-year growth of foreign direct investment (FDI), one of the driving forces of the economy, fell for the third straight month in December, the Ministry of Commerce (MOC) said on Thursday.

FDI for the whole of last year, however, grew 23.58 percent to US$92.4 billion, thanks to the robust growth in the first three quarters. In comparison, actually used FDI in 2007 grew 13.59 percent to US$74.8 billion.

The MOC, which held a press conference yesterday, did not release the contractual FDI figures for last year.

China has been one of the biggest FDI recipients in the past decade, but the global financial crisis could change the trend, even if slightly, this year, experts said.

Mei Xinyu, a senior researcher with the MOC, said he was "not optimistic" about this year, and feared that FDI could even "see a small drop".

Su Chang, senior analyst with China Economic Business Monitor, was more specific, saying FDI could fall by 5 to 10 percent in the first half of this year. But, he said, it would see a positive turn in the second half.

As MOC data show, the top source of FDI last year was Hong Kong, which pumped in US$41 billion for a 48 percent annual increase.

British Virgin Islands was the second biggest source of FDI, providing US$15.95 billion. But the figure is 3.62 percent less than that in 2007.

FDI from Japan rose 1.76 percent to US$3.65 billion. It was followed by South Korea with US$3.14 billion (14.76 percent or the largest drop) and the US with US$2.94 billion (up 12.54 percent).

The service industries (excluding banking, insurance and securities) were the major FDI recipients, drawing US$38.1 billion, or 24.23 percent more than in 2007.

Minister of Commerce Chen Deming said recently that FDI helped generate about 55 percent of the country's exports.

The MOC will continue to encourage FDI, especially in new technologies, environmental protection projects and the service sector, he said. The government will expedite the drafting of favorable policies for FDI in the relatively under-developed central and western regions, too.

The government has been announcing new plans and policies, including the massive US$586-billion stimulus package, almost every week since early November to boost economic growth.

(China Daily January 16, 2009)