China's actual use of foreign investment plunged 32.67 percent year on year to 7.54 billion U.S. dollars in January, Yao Jian, spokesman for the Ministry of Commerce (MOC), said at a press conference Monday.

Foreign investment use has seen consecutive falls in China since October, when a 2.02-percent annual drop was recorded.

The slump in January was slightly slower than the 36.52-percent decrease in November, but the whole-year situation would still be grim, said Zhang Yansheng, head of the International Economic Research Institute under the National Development and Reform Commission.

"Foreign investors are withholding their money because of the spreading global financial crisis ... China won't be an exception in this downturn," said Zhang.

China used 92.4 billion U.S. dollars in 2008, up 23.6 percent from 2007, data from the National Bureau of Statistics showed. The growth was 10 percentage points higher than that of 2007.

The upward trend would experience a turning point this year even without the global financial crisis, as China's adjustment to its foreign investment policies took effect, said Zhang.

The Chinese government has tried to adjust the structure of foreign investment use, which accounts for more than half of China's exports, to upgrade its export sector.

Measures taken included raising labor cost, reducing or scrapping tax rebates on some resource- and energy-intensive exports and allowing its currency to appreciate more than 20 percent.

If the global financial crisis didn't happen, the growth in China's foreign investment use would slow down this year with less input in the manufacturing sector, said Zhang.

However, the unexpected world economic downturn would only "rub salt into the wound", while sharply lower foreign investment would further impact China's industrial output and exports, he said.

(Xinhua News Agency February 16, 2009)?