China will continue to work with other countries to promote and facilitate the flow of cross-border investment, officials said at the ongoing 16th International Fair for Investment and Trade being held in southeast China's city of Xiamen.[Hong Kong company registration]

"International investment is a major driver for global economic growth. We should work together to fight protectionism and remove barriers to create a better environment for business investment," state councilor Ma Kai said.

According to a report released in July by the United Nations Conference on Trade and Development, global foreign direct investment exceeded the pre-crisis average in 2011, reaching $1.5 trillion despite turmoil in the global economy.

Foreign direct investment increased across all major economic groups in 2011, with FDI going into developed counties increasing by 21 percent to $748 billion, while in developing countries, FDI rose 11 percent to a record $684 billion, the report said.

Statistics from the Ministry of Commerce showed FDI in China reached $116 billion in 2011.

Weighed by the weak growth of the economy, which slowed to a three-year low of 7.6 percent in the second quarter, FDI in China has seen a retreat this year.

MOC data showed that the total FDI for the first seven months of the year came in at $66.67 billion, down 3.6 percent year-on-year, with investment from the debt-plagued European Union shedding 2.7 percent year-on-year to $3.97 billion.

Meanwhile, recent reports about foreign businesses planning to leave China due to rising labor and materials costs have added to concerns that foreign capital is rapidly leaving China.[Set Up Company Hong Kong]

A recent report released by the US Chamber of Commerce and AmCham Singapore showed that 21 percent of US companies plan to shift part of their investment or operations in China to southeast Asian countries in the coming two years due to China's rising production costs.

"This could be a problem for China, as foreign investment brings capital and new technology to China. The Chinese government should modify its policies to attract more foreign capital," said Nobel laureate and "father of the euro" Rober Mundell.

He said China should lower corporate tax rates to ease burdens on businesses and offset the rising cost of labor and materials.

Gao Hucheng, vice minister of commerce, said China will encourage foreign capital to enter the country's modern agriculture, high-end manufacturing, new technology, new energy and service sectors.

The government will also guide foreign capital toward China's less-developed middle and western regions and improve relevant regulations in order to create a fair and transparent environment for foreign investors.[Hong Kong Company Formation]

Ma also encouraged foreign investors to engage in the restructuring of state-owned enterprises through mergers and acquisitions.