Foreign direct investment in China rose 23.4% year-on-year to US$10 billion in January, Bloomberg reported. The figures, released by the Ministry of Commerce on Thursday, exceeded the expectations of most analysts, and highlight the challenge the country’s leadership faces in taming the risk of overheating. "Foreign inflows are complicating the government’s efforts to reduce excess liquidity and contain inflation," Scott Chen, an economist at Bank SinoPac in Taipei, noted ahead of the release. It is thought that China may need to sanction further interest-rate rises and allow faster renminbi appreciation in order to contain the amount of cash flooding into its economy. Rising incomes and high demand for luxury goods in China will continue to attract foreign investment over the course of 2011, added Chen, after inflows hit a record US$105.7 billion in 2010.
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