Continuing inflows of foreign direct investment (FDI) into China is expected to help offset any falling trade volume caused by the slowing United States economy. Nomura International head of strategy and economics William Overholt, after an American Chamber of Commerce luncheon in Hong Kong yesterday, said the contraction of the US economy would have an impact on China's trade volume. The US economy recorded the biggest decline in growth in more than a decade, with third-quarter gross domestic product slipping 0.4 per cent. GDP last contracted in the first quarter of 1993. Trade is an important sector of the Chinese economy, the volume equivalent to 44 per cent of China's GDP. The US is China's second-biggest trade partner, with bilateral trade last year totalling US$74.4 billion. Mr Overholt, he said strong FDI inflows would drive economic growth. He said as long as China's inflows of FDI were not interrupted by the September 11 attacks in the US, the Chinese economy would keep moving. 'If we see a serious downturn in FDI, then there is a problem. But I don't think we will,' he said. Last year, the contractual value of FDI into China rose 52 per cent to US$63 billion, or about 6 per cent of the country's GDP, and increased nearly a third in the first eight months of this year. China is the world's second-largest FDI recipient after the US, with its growth being fuelled by its imminent entry to the World Trade Organisation, expected in about a week. Analysts have forecast that China's FDI this year will grow 12 per cent to about US$45 billion. The FDI inflows saw no signs of decline despite the terrorist attacks.