Foreign investment in manufacturing to weaken as Beijing readjusts policy China's annual economic growth is forecast to slow to roughly 10 per cent this year as the central government tries to enforce policies aimed at curbing investment, Xinhua yesterday quoted an influential government think-tank as saying. The Chinese Academy of Social Sciences also said it believed the nation's gross domestic product probably grew by 10.5 per cent last year, according to an abstract of an annual policy report. Beijing has yet to announce last year's GDP figures, but government statisticians also said last week that growth would be around 10.5 per cent. China's economy grew 10.2 per cent in 2005, according to a revision announced in August. In a less-optimistic forecast, the National Development and Reform Commission is predicting economic growth will slow to below 10 per cent this year for the first time since 2002, the planning agency said in October. Foreign direct investment on the mainland is forecast to rise 4 per cent this year to about US$63.8 billion, a research institute under the Chinese Academy of Sciences said in a separate report. Beijing has not released foreign investment figures for last year. In the first 10 months of the year, foreign direct investment edged up a mere 0.34 per cent to US$48.6 billion, official figures showed. The Chinese Academy of Sciences attributed the slowdown to weaker foreign investment in manufacturing and the government's move to improve the quality of foreign investment instead of encouraging export processing alone. Foreign analysts and companies have noted an apparent backlash against foreign investment in China, seen as moves by the central government to protect industries it considers strategic. Investment pledged by foreign investors in Shanghai slowed last year as the city faced growing competition from other mainland cities and the fallout from a corruption scandal. Contracted foreign direct investment reached US$14.6 billion, rising 5.4 per cent year on year, the Shanghai Foreign Economic and Trade Commission said. It pales in comparison to an annual rise of 18.3 per cent in 2005. Actual foreign investment exceeded US$7 billion last year, the commission said. In 2005, foreign investment rose 4.7 per cent to around US$6.9 billion. Shanghai is facing more competition from other cities that have lower land and labour costs. A survey by the Chinese Academy of Social Sciences last year ranked Suzhou the most attractive to foreign investors, followed by Shanghai, Qingdao, Shenzhen and Dalian . Although foreign companies say the sacking of Shanghai party secretary Chen Liangyu for corruption in late September has not affected operations, the move has led to uncertainty over the future. Shanghai remains without a top leader as Mayor Han Zheng stands in as acting party secretary.