This registered a 14.9 percent year-on-year increase and wrote off 1998's record inflow of US$45.46 billion foreign capital into the market.

The rapid increase is a strong rebound from falls in China's use of FDIs in the past two years due to the 1997 Southeast Asian financial crisis.

The tumult shook up foreign investors' confidence in the so-called "tiger'' economies and decreased money input in China by 11.32 per cent in 1999 and a further 0.19 percent last year.

China is walking out of the shadow of the financial crisis as Southeast Asian economies recover from the attack, said Wang Zhile, a senior researcher with the Chinese Academy of International Trade and Economic Cooperation, a think-tank of MOFTEC.

He said China is also an attractive target for many foreign investors because of its outstanding economic performance against the background of a gloomy world economic outlook.

The Chinese economy is projected to have increased about 7.3 percent year-on-year last year, compared with 2.4 percent for the world as a whole, as estimated by the International Monetary Fund.

China's WTO accession boosts foreign investors' confidence in the market, said Long Guoqiang, a senior researcher with the Development Research Centre of the State Council.

He said the high rise in actual FDI was also a result of the rapid increase in China's contracted FDI last year.

Contracted FDI increased 10.43 percent from 2000 to US$69.19 billion last year, according to MOFTEC statistics.

He said he expected the increase in China's use of FDI to accelerate this year, when China starts to carry out its commitments to the WTO.

Investment in China's service sector, including banking, insurance and telecommunications, will rise rapidly after China grants foreign investors larger access as a WTO member, said Long.

The point was echoed by Wang Zhile, who said the momentum in the increase of China's use of foreign investments is to be sustained for years after China's WTO entry.

(China Daily January 15, 2002)