BEIJING (Kyodo) Japanese investment in China in 2005 jumped 19.8 percent from a year earlier to a record-high $6.5 billion, even as investment from the United States and South Korea dropped, a Japanese government-linked trade organization said Monday.

Japanese investment grew in the latter half of the year, as companies that had held back due to the anti-Japan demonstrations last April regained confidence in the market, said a report by the Japan External Trade Organization’s Beijing office.

Other reasons for the surge include a series of large-scale investments by Japanese automakers that prompted car parts companies to set up manufacturing bases in China, the report says.

Electronics makers also continued to invest in the country, as they bolstered their manufacturing capacities for products intended for the Chinese market, according to the report.

Deregulatory measures taken in 2005 that allowed the establishment of 100 percent foreign-owned wholesale and retail companies in China also prompted more investment from Japan, the report says.

While Japan’s investment increased, those from other major countries and areas fell, including Hong Kong, South Korea and the United States, partly in reaction to a surge in investment in 2004, according to the report.

China’s entire foreign direct investment in 2005 came to $60.3 billion, down 0.5 percent from a year earlier.

The report says that while last year’s demonstrations prompted Japanese companies to consider diverting some of their investments to other countries, China continues to be an important focus for Japanese investment.

“Japanese companies have renewed their recognition regarding the risks of investing in China,” the report says.

“But we expect no changes in the situation under which China remains Japanese companies’ focus of investment,” as the country already serves as Japan’s manufacturing base, and its vast market remains attractive to Japanese companies, the report says.

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