Shanghai's service industry attracted more than half of the city's contracted foreign investment in the first 11 months of this year, outstripping the long-dominant manufacturing sector for the first time.

The latest figures indicate progress in the city's bid to lure more investment in finance, logistics and other services, analysts said.

Total contracted foreign investment, which accounts for future funding commitments, rose 20.5 percent to US$12.9 billion yuan from last year, Liu Jinping, vice director of the Shanghai Foreign Investment Commission, said yesterday.

The total is expected to reach US$13.8 billion by the end of the year, an increase of more than 20 percent from last year. In 2004, contracted foreign investment increased 12.6 percent.

Shanghai's foreign direct investment -- or funds received -- rose 6.2 percent in the first 11 months to US$6.6 billion. The growth rate for 2004 was 11.8 percent.

Fifty-three percent of the city's total contracted foreign investment through November was directed to the service sector, compared with 39.1 percent for all of last year.

"The city is optimizing its structure by drawing more foreign funds into the service sector and being more selective in introducing manufacturing projects," Liu said.

An increasing number of foreign investment projects occurred this year in the finance, logistics, insurance brokerage, medical, advertising, entertainment, cultural, human resource, education, health and sports industries, he said.

The city approved 20 financial leasing projects this year and even more in automobile financing, insurance, funds, asset management and financial training, according to Liu.

Among them, Citigroup set up a unit in Shanghai earlier this year responsible for financial training of its employees in 17 countries and regions.

Ford Motor Co established an auto finance company in Shanghai this year as well.

From January to November, another 38 multinational regional headquarters, including those for Bosch and McDonald's, landed in Shanghai, bringing the total to 124.

Thirty research and development centers run by multinationals such as Cisco and Ciba Specialty Chemicals cropped up, for a total 130 such enterprises.

"With China's central bank setting up its second headquarters in Shanghai's Pudong New Area and the city loosening its control of foreign exchange in the new area, the momentum will continue for attracting multinational regional headquarters," Liu said.

"The city's role as an international seaport and air hub will also lure related international service projects."

(Shanghai Daily December 28, 2005)