Foreign Direct Investment (FDI) in China rose in January despite concerns over market barriers and rising labor costs in the country.

FDI increased 23.4 percent to $10.03 billion in January year-on-year, the Chinese commerce ministry said on Thursday.

With China's economic restructuring going on, foreign direct investment in the service sector will surely expand more quickly in the future, Reuters said, quoting Yao Jian, spokesman of the ministry.

China’s growing services industry attracted foreign investment worth $4.69 billion in January, up 31.8 percent compared with the same month last year.

The total number of approved foreign-invested enterprises rose by 20.2 percent to 2,243 in January on annual basis, Yao said.

Yao said that the country would try to attract more FDI in the form of mergers and acquisition as it accounted for only 3 percent of foreign investment in China.

In the coming years, the investment through mergers and acquisitions will take up an increasing share of our country's total foreign investment, say about 6 to 7 percent, he said.

China plans to launch an investment review body to oversee foreign M&A deals, so that they will not harm national security, the cabinet said on Saturday.

Foreign investment in the western region of China rose 81.1 percent to $510 million in January year-on-year, while investment in the eastern region was up 23 percent to $8.98 billion.

Rising labour costs and raw material prices have been driving foreign manufacturers from the eastern part of China to the less developed inland areas, Yao said.

In 2010, FDI in China stood at $105.7 billion with inflows in December reaching record $14 billion.