South Korean companies poured more money into the Chinese market than Japanese and U.S. firms in the first six months of this year, according to a report by the Korea International Trade Association (KITA) Tuesday.

South Korea's direct investment in China was $3.52 billion between January and June, making it the third-largest foreign investor in mainland China after Hong Kong and the Virgin Islands, the report saidbased on data from the Chinese government.

The figure represented a 54.4-percent jump from the same period lastyear.

The United States was fourth with $2.95 billion, followed by Japan with an investment of $2.43 billion, it added.

Japan¡¯s investment in China grew by 6.9 percent and the U.S¡¯s by3.8 percent in the January -June period this year.

``Given that Hong Kong and the Virgin Islands are leading tax havendesignations, South Korea might be the de facto largest foreign investor in China in that period,¡¯¡¯ the report pointed out.

``This also proves a growing number of Korean firms are escaping overseas in pursuit of lower costs.¡¯¡¯The agency found that nearly four in 10 overseas South Korean companies had operations in China as of the end of June.

The number of Korean firms doing business overseas (overseas branches of a Korean firm included) reached 6,623 as of the end of June, among which 2,888 firms, or 43.6 percent are doing business in China. The report showed foreign direct investment in China rose 15 percentfrom a year ago to $38.4 billion in the seven months through July.

(Korea Times 2004-8-24)