FOREIGN direct investment in China grew at the fastest pace in four months in July, increasing 19.83 percent from a year earlier to US$8.29 billion, the Ministry of Commerce reported yesterday.

That compared with a 2.83 percent increase in June, but the actual value of foreign investment last month was well under June's US$12.8 billion.

"The contradiction is mainly out of different bases," said Xu Weihong, an analyst at Guodu Securities Co. "On the whole, foreign investors still hold strong interest in China because of its growth potential and weak markets elsewhere."

As the United States may introduce more quantitative easing, some analysts expect accelerating foreign investment in the coming months.

"If the US extends its quantitative easing policies again, China may witness a new wave of speculative money," said Li Maoyu, an analyst at Changjiang Securities Co.

Li said the current growth of foreign investment remained stable, considering May's pace of 13.4 percent and April's 15.2 percent.

The US Federal Reserve has pledged to keep its key interest rate at a record low for two more years after a first-ever cut of its credit rating by Standard & Poors. Such signs indicating economic weakness in the US, while Europe remains mired in a debt crisis, may effectively divert more global funds into China.

Before the downgrade, there were signs that US and European businesses were cutting their investments in China. In the first six months, US investors channeled US$1.67 billion into China, down 22.32 percent from a year earlier. European Union countries invested a combined US$3.46 billion during the period in China, up 1.17 percent year on year.

E. B. Rajesh, chief representative of the Confederation of Indian Industry, said China is still the top candidate for foreign investors.

"Although labor costs are rising rapidly, China has such a big pool of skilled workers that you can't find anywhere else," Rajesh said.

In the first seven months of this year, foreign investors pumped a total of US$69.18 billion into China.