Investment in the private sector slid by 17.8 percent last month from a year earlier to US$6.38 billion (HK$49.76 billion). But May's figure was better than April's 22.5 percent contraction, Ministry of Commerce spokesman Yao Jian said yesterday.

The mainland attracted a total of US$34.05 billion from foreign firms in the first five months, a drop of 20.4 percent, which Yao said was the largest decline since October last year.

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"It also was the first time newly registered foreign firms, joint ventures and direct investment headed south since the 1998 Asian financial crisis."

There were 1,649 newly registered foreign-funded firms last month, down 32 percent year on year.

Yao conceded it would be difficult for China to ensure an 8percent economic growth target this year as global recovery takes time. He also disclosed a delegation of mainland firms led by the ministry will visit Taiwan early next month to look for investment and buying opportunities. More than 60 firms have signed up and they expect to confirm orders of up to US$1.4 billion.

The amount is significantly larger than the US$827 million spent on Taiwanese goods by another mainland delegation which visited the island earlier this year.

Yao also reiterated the Hummer acquisition proposal by Tengzhong Machinery was a "normal and rational" act, but the ministry has yet to receive any submission from the Chongqing firm. He added that the failure of Chinalco to buy Rio Tinto was an individual case and will not ruin cooperation between China and Australia.