China's foreign direct investment inflows witnessed a negative monthly growth in February.

Actual FDI rose 8.2 per cent year-on-year to nearly US$8 billion in the first two months of 2005, according to statistics from the Ministry of Commerce.

Contracted foreign investment, an indicator of future investment flows, was US$20.1 billion, up 6.2 per cent, the ministry said.

The ministry also said the country approved 5,444 new foreign-funded companies in the first two months, reflecting a decrease of more than 9 per cent year-on-year.

The ministry said actual FDI in China was US$3.9 billion in February, down about 7 per cent from a year earlier. Contracted foreign investment was US$7.3 billion in February, a fall of 18 per cent year-on-year.

Sun Xiaohua, an expert from the Chinese Academy of International Trade and Economic Co-operation said it is early to say whether FDI to China will drop this year.

"I would attribute the drop to the Spring Festival holidays which were in February this year but in January last year," he said.

He prefers to look at the long-term trend.

"I believe China's actual FDI inflows will retain the level they were at last year," he said.

Source: China Daily