FOREIGN direct investment in Shanghai rose 12.5 percent from a year earlier to US$1.51 billion in May, the second month of double-digit growth, at a time when China's FDI expanded by less than 1 percent.

Contracted investment in the city's manufacturing sector, which accounted for nearly one-fifth of the total value, jumped 9.3 percent annually in May, according to the Shanghai Statistics Bureau. Investment in the service sector, taking up about four-fifths of the total, gained 3.4 percent.

Although Shanghai's FDI pace in May slowed from the 14.9 percent in April, 341 foreign-invested projects were still signed last month, the bureau said.

Jeffrey Wang, vice president of the Shanghai Foreign Investment Development Board, has cited the city's stable economic growth, its pro-foreign investment policy and a well-regulated business environment for it being a favorable spot for foreign capital.

Shanghai is the city where many reforms are tried out start, a point appealing to foreign investors.

Xu Quan, deputy director of the Shanghai Financial Services Office, said on Tuesday that the city is waiting for the central government to approve a pilot free trade zone in Pudong New Area, which will allow Shanghai to liberalize interest and exchange rates as well as some financial products on a trial basis.

The annual Lujiazui Forum will open in Pudong today and 156 speakers from around the world and more than 550 participants are expected to attend.