Foreign direct investment in China jumped 38.31 percent in February, raising concerns that more cash from abroad may spur rising inflation even higher.

Investment by overseas companies rose to US$6.93 billion from a year earlier, the Ministry of Commerce said today on its Website. Investment in the first two months climbed 75.19 percent to US$18.13 billion.

China's consumer price index rose 8.7 percent year-on-year last month, the biggest leap since the 8.9 percent gain recorded in May 1996.

The country's trade surplus dropped to US$8.6 billion last month.

Inflation and overheating are the biggest threats to the economy this year, Premier Wen Jiabao said last week.

The central bank is paying close attention to "excessive'' growth in foreign direct investment, the China Securities Journal reported this month, citing Hu Xiaolian, director of the State Administration of Foreign Exchange.

Interest-rate cuts by the US Federal Reserve and speculation that the yuan will continue to appreciate make China a more attractive destination for foreign investors.

The People's Bank of China raised interest rates six times in 2007 and has ordered lenders to set aside more deposits as reserves on 11 occasions since the start of last year, pushing the ratio to a record of 15 percent.

(Shanghai Daily March 12, 2008)