FOREIGN direct investment in the city in 2010 grew by 15.1 percent - more than three times the rate posted the previous year, the Shanghai Commission of Commerce said yesterday.

Much of the overseas cash coming in was invested in strategic industries encouraged by local government, said the commission.

Shanghai attracted US$15.3 billion in contracted foreign investment last year, up more than 15 percent over a year earlier.

The pace picked up dramatically from the increase of 4.5 percent in 2009, when the global financial crisis pinched the world economy, making foreign investors reluctant to dip into their pockets.

The number of foreign-invested projects jumped 26.4 percent year on year to 3,906 in 2010, with more investment going to modern services and advanced manufacturing sectors.

"The global economy is in better shape, which definitely has helped Shanghai to get more foreign investment," said Huang Feng, vice chairman of the commission. "In addition, the city grabbed the opportunity offered by the World Expo to demonstrate its attractiveness to foreign investors."

The Expo helped improve the city's infrastructure, housing, trade and investment environment, as well as its international reputation and attractiveness, according to the 2010 white paper released yesterday by the commission. The paper examined the environment for foreign investment in Shanghai.

In 2010, the city's services industry attracted US$12.4 billion of foreign direct investment, up 15.7 percent from a year earlier. As part of this, foreign funding in financial services jumped 28 percent, while commerce services saw a 32 percent increase.

Shanghai's manufacturing sector attracted US$2.73 billion of foreign investment last year, up 13.9 percent on 2009.

Machinery and car manufacturing, new-energy production, environment-friendly materials and other sectors reported fast growth. Foreign investment in such strategic industries can speed up Shanghai's efforts to restructure its economy, said commission Chairman Sha Hailin earlier.

By the end of 2010, 305 multinational companies, including 74 on the Fortune Global 500 list, had set up regional headquarters in Shanghai, while 319 foreign-invested research and development centers were established in the city.

For 2011, Shanghai will encourage foreign investors to retain core business in the city, even though operational costs may rise. "While they may relocate production, we suggest foreign investors keep core subsidiaries - such as research and development, marketing and sales - in Shanghai," Huang said.