Foreign direct investment in Shanghai grew at the fastest pace in at least three years in 2011, with more overseas funds invested in the city's strategic industries, the Shanghai Commission of Commerce said yesterday.

Although there are increasing uncertainties ahead, government officials said they expect "stable" growth in 2012.

Shanghai attracted US$20.1 billion in contracted foreign investment in 2011, up 31.3 percent from a year earlier. The pace picked up dramatically from the 15.1 percent gain in 2010 and the 4.5 percent rise in 2009.

The number of foreign invested projects jumped 10.8 percent year on year to 4,329 in 2011. Projects worth more than US$10 million grew to 256 and were valued at a combined US$17 billion, or 84.7 percent of total foreign investment in 2011.

"Shanghai broke the record again (in terms of value of foreign investment) despite unfavorable external economic conditions," said Chen Xianjin, the commission's vice chairman. "It shows the city provides a good investment environment for foreign investors."

Although operational costs are rising in Shanghai, Chen said the city remained attractive for foreign investors because of better regulations, more transparent implementation of these regulations and an efficient government.

In 2011, a total of US$17 billion in foreign investment went into the service industry, up 37.6 percent from a year earlier. The manufacturing sector attracted US$2.9 billion in foreign funds, an annual rise of 6.3 percent.

The proportion of foreign investment in services, manufacturing and agriculture was 85 percent, 14.9 percent and 0.1 percent, respectively, reflecting the city's efforts to restructure the economy toward services, Chen said.

By the end of 2011, 353 multinational companies had set up a regional headquarters in the city, making Shanghai the biggest hub for foreign firms' regional headquarters in China. Meanwhile, 334 foreign invested research and development centers had been established in the city.

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