BEIJING --China's yuan has great potential to appreciate, making the country continue to be a favorite destination for foreign investments, said Vice Commerce Minister Chen Jian Saturday.

Chen, speaking at an International CEO Roundtable conference in Beijing, didn't forecast how much the yuan will rise.

The People's Bank of China has aimed to keep the local currency stable as a priority in its policy while Beijing tries to boost the country's economic growth.

The Ministry of Commerce has expressed concerns that a strong yuan would hurt the country's exporters, which have already suffered from a sharply weaker external demand.

But the government is also worried about any significant slowdown in foreign capital inflows into China or even quick outflows from the country as the domestic economy cools further.

In the January-October period actual foreign direct investment in China totaled US$81.1 billion, up 35.06% from a year earlier. The growth rate slowed from the 39.9% increase in the January-September period.

Chen predicted combined foreign direct investments all over the world will fall between 10% and 30% this year due to the global financial turmoil.

The financial crisis will speed up the restructuring of global auto and financial companies, which will create investment opportunities and could result in an increase of mergers and acquisitions, Chen said without elaborating.

China's non-financial institutions had US$32.7 billion in direct investments overseas in the first three quarters, nearly 2.5 times that in the same period last year, Chen said.

-Liu Li and Victoria Ruan contributed to this story, Dow Jones Newswires; 8610 6588-5848; victoria.ruan@dowjones.com

(dowjones.com, Nov 17, 2008)