FOREIGN direct investment in China grew 9.9 percent in the first five months from a year earlier.

Spending by overseas companies rose to US$25.26 billion, Bloomberg quoted the Ministry of Commerce as saying today.

In May, foreign direct investment in the world's fourth-largest economy climbed 8.7 percent to US$4.9 billion.

Low manufacturing costs and an increasingly wealthy consumer market of 1.3 billion people are luring businesses to set up operations in the fastest-growing major economy. Companies backed by foreign investment produced 58 percent of China's record US$969 billion of exports last year, the Ministry of Commerce said.

"China's large trade surplus is a result of government policy over the past two decades of attracting foreign direct investment, most of which ends up in manufactured goods for export,'' Fan Gang, a monetary policy adviser to the People's Bank of China, said on June 5.

China was the world's fourth-largest recipient of foreign direct investment in 2006, according to the United Nations. Spending by overseas companies climbed 4.5 percent from a year earlier to US$63 billion.

Investment by foreign businesses has helped to push the country's currency reserves to a record US$1.2 trillion, more than a fifth of the world's total.

Shanghai Daily