Realized foreign direct investment (FDI) in the country rose in October after annualized declines in the previous four months, the Ministry of Commerce said Wednesday.

The amount grew nearly 16 per cent to US$5.99 billion and 3,047 foreign-invested enterprises were approved.

The country attracted US$48.58 billion in FDI from January to October, up 0.34 per cent from a year earlier, ministry spokesman Chong Quan told a news briefing.

During the same period, 33,068 foreign-invested ventures were approved, down 6.32 per cent year on year.

The ministry did not reveal figures for contracted FDI.

Hong Kong ranked first among sources of FDI, followed by the British Virgin Islands and Japan.

Although the increase was slight compared with last year, the average value of each investment deal rose, said Gao Hong, a research fellow with the Chinese Academy of Social Sciences.

He attributed it to the government paying more attention to the quality of overseas investment rather than quantity.

The figures released by the commerce ministry did not include investment flows to the financial sector, which has become a major destination of FDI since last year.

"A lot of foreign money is coming into China's banking sector as the deadline at the year-end for the full opening of the banking sector draws near," Citigroup economist Huang Yiping said.

The National Development and Reform Commission (NDRC), the top economic planner, said last week that the country welcomes foreign companies as strategic investors in commercial banks and State-owned insurers as long as the Chinese side holds a controlling stake.

The move is expected to attract more inflows to the financial services sector during the 11th Five-Year Plan (2006-10).

The banking regulator is expected to publish revised administrative rules on foreign banks, allowing them to deal with renminbi retail business.

FDI in the sector jumped to US$12 billion last year, compared with less than US$2 billion in 2004.

The spokesman also touched on China's trade and economic relations with Viet Nam, India and Pakistan with President Hu Jintao yesterday starting his visit to the three countries.

Chong said he believes that Chinese products and services would have an easier access to Viet Nam after the Southeast Asian nation recently concluded negotiations for accession of the World Trade Organization.

Bilateral trade between China and Viet Nam reached US$8.2 billion in 2005, and Viet Nam is one of the major overseas investment destinations of Chinese enterprises.

Trade between China and India is expected to reach US$20 billion this year, two years ahead of the target set by the two governments.

China is also likely to reach a free trade agreement with Pakistan in the near future, Chong said.