FOREIGN direct investment in China climbed for the 12th straight month in July as foreign investors maintained their confidence in an economy that surpassed Japan in the second quarter to become the world's second largest.

Foreign investment expanded 29.2 percent from a year earlier to US$6.92 billion last month, the Ministry of Commerce said yesterday. It followed a jump of 39.6 percent in June.

In the first seven months, FDI rose an annual 20.7 percent to US$58.35 billion, after a 19.6 percent increase in the first half.

China was the second-largest recipient of foreign investment last year with US$95 billion, only behind the United States which received US$130 billion, according to a report by the United Nations last month.

"China has strengthened its position as an attractive destination for foreign investment thanks to its performance amid the global financial crisis," said Xue Jun, an analyst at CITIC Securities Co. "With the country overtaking Japan to become the world's second-largest economy, it is expected to become a more popular destination among overseas investors."

China was confirmed as the world's second-largest economy with an output of US$1.337 trillion in the second quarter while Japan reported a nominal gross domestic product of US$1.288 trillion.

In July, overseas investors established 2,082 new companies on the mainland, an increase of 12.9 percent from a year earlier.