Foreign direct investment in China rose 32.2 per cent in February from a year earlier but was less than the previous month, official data showed Tuesday, as Beijing tries to stem a flood of liquidity.

China attracted $7.8 billion in foreign investment last month, the commerce ministry said in a statement, compared with $10.03 billion in January.

Analysts say robust growth in the world's second-largest economy and expectations for a stronger currency have attracted a growing number of overseas investors to China, hoping for a better return on their money.

But the government, alarmed by soaring food and real estate prices, has been trying to reduce the volume of money flowing into the economy as inflation continues to soar.

The consumer price index, a key gauge of inflation, rose 4.9 per cent in February from a year ago, official figures showed last week, unchanged from January and above the government's annual inflation target of four per cent.

China has raised interest rates three times in recent months and ordered banks to increase their cash reserves on a number of occasions as authorities try to curb bank lending, which has been fuelling property prices and inflation.

Foreign direct investment in China hit a full-year record of $105.7 billion in 2010, up 17.4 per cent year-on-year, with more than a fifth of the money flowing into the booming real estate sector.

channelnewsasia.com