Foreign investment in China surges 33 per cent

Foreign direct investment to China jumped 33 per cent in March from a year earlier despite rising inflation and interest rates failing to dampen investor confidence the country.

In a statement in Beijing today, the ministry of commerce said foreign investments added $12.5 billion to China's economy. Investments were up at an annual rate of 29 per cent during the first quarter.

According to China's central bank it would ratchet up lenders' reserve requirements for the fourth time this year, which would help check inflation that accelerated to the fastest pace in almost three years in March. Meanwhile, Wal-Mart Stores Inc (WMT) last month said it was considering buying more land to build shops in the world's most populous nation. The country will be the largest grocery market in the world by 2014.

Meanwhile, according to some analysts, investment flows are continuing since China continues to outpaces the growth of other major economies in the world.

They expect China to up the banks' reserve requirement ratios by 50 basis points by June, and another two to three times in the second half this year.

The latest hike in reserve ratios would take effect on 21April, pushing the requirement to a record 20.5 per cent for the biggest lenders.