Jump in China Jan FDI not due to hot money -minister

A doubling in China's foreign direct investment (FDI) in January reflects normal activity and does not disguise inflows of hot money, Commerce Minister Chen Deming said on Monday.

China drew $11.2 billion of FDI in January, 110 percent more than a year earlier. Because China's rising costs argue against less, not more, FDI, some academics wondered whether the jump concealed speculative transfers of capital betting on a further strengthening of the yuan.

But Chen, speaking to reporters during the annual parliament session, said this was not the case.

FDI for the whole year would grow steadily, he said, although there were many uncertainties. China attracted $74.77 billion in FDI in 2007, an increase of 13.6 percent from 2006.

Chen brushed aside reports of an exodus of foreign companies triggered by rising input costs and onerous new labour laws. Only a few companies in a few parts of the company had left China, he said.

Turning to the yuan, he said the value of the currency would be determined by market forces.