Shanghai has already managed to nearly achieve its self-imposed target of attracting US$6 billion in overseas investment this year by landing 1,342 projects worth US$5.22 billion in contracted overseas capital in the first six months.

According to statistics released yesterday by the Shanghai Foreign Investment Commission, the figure was 30.33 percent more than a year ago. Of the total, 103 projects were worth more than US$10 million, accounting for 68 percent of the total investment volume.

Hong Kong, Japan and the Virgin Islands continued to be the top-three overseas investors.

Looking to the future, the commission said that with investment rules being relaxed, Shanghai is expecting a big jump in overseas capital in the services sector.

Pried open by the World Trade Organ-ization, seven categories in the services sector will soon be able to absorb overseas capital. They are wholesale, retail and logistics services, accounting and auditing, higher-education institutions, construction and operation of cinemas, distribution of audio and video products, value-added telecommunications services and highway transportation.

"Shanghai will try its best to woo overseas investment in these sectors," said Liu Jinping, deputy director of the commission, "But, we will strictly select investors, checking their size and technology level to ensure quality investment."

In its pledge before joining the trade organization last December, China promised to allow foreign companies to hold shares in these fields a year after its entry.

Being a magnet for overseas investment, Shanghai has already seen a couple of deals in the newly opened fields.

Warner Bros., an AOL Time Warner subsidiary that creates and markets movies, television programs and related products, revealed earlier this month that it has signed a letter of intent with Shanghai Paradise Film Show Management Co. to form a joint venture cinema operator.

And the city government-owned SVA Group signed a letter of intent on July 1 with Australia's largest telecom operator Telstra Corp. to jointly offer value-added telecom services in China.

Statistics show that while the industrial sector takes up more than 60 percent of the total overseas investment, 35 percent goes to the services sector.

"But it is the services sector that has seen the fastest growth," said Liu.

Presently, there are 26,070 overseas-funded projects in Shanghai worth US$58 billion in contracted investment. But the funds actually received amount to US$37.7 billion.

Foreign-funded companies have raised their profits, contributing a lot to the city's exports, Liu said.

During the first five months of this year, revenue of overseas-funded companies jumped 46.8 percent from a year ago. Their profits rose 11.5 percent.

Export volume of overseas-invested companies during the same period hit US$7.1 billion, accounting for more than 60 percent of the city's total exports, compared with 57 percent a year earlier.

Meanwhile, the commission revealed plans to build a Japanese Industrial Trade Zone along the lines of the several Taiwan zones opened in the last few years.