Chinese shoppers' deeper pockets have been credited with helping foreign direct investment climb almost 14 percent year-on-year.

China saw its FDI climb 13.9 percent in January from a year earlier, according to the Ministry of Commerce.

The country received some $5.18 billion in FDI last month, the ministry said yesterday.

"Domestic purchasing power is playing a bigger role in attracting foreign investment," said Tim Condon, an economist at ING Bank NV in Singapore. "But China also remains a very attractive destination for companies relocating plants."

Foreign investors are still active in China despite plans to unify the corporate income taxes of foreign-invested and domestic companies, a move which will deprive foreign-funded businesses of favorable tax rates from the beginning of 2008.

The move reflects a change in government policy from a scramble to attract as much investment as possible to a focus on quality.

The Ministry expects FDI in 2007 to be level with last year, but it hopes quality and efficiency will be improved.

Total FDI was $63 billion in 2006.

The government aims to encourage the growth of manufacturing sectors which offer high added-value and services industries, while it has stopped approving foreign investors whose works pollute and are inefficient.

FDI to less-developed central and western China is also being promoted.

The ministry approved 3,370 foreign-invested enterprises last month, up 10.71 percent from a year ago. It did not disclose the total contracted investment, as many agreements are yet to be fulfilled.

Hong Kong, the Virgin Islands and South Korea are the top three sources.

The FDI from US companies increased by nearly a third year-on-year the ministry noted without providing more details on the sources of American investment.
 
Editor: Yan