China's sprawling manufacturing sector remains a magnet for foreign investment as more foreign capital finds its way into key fields such as advanced manufacturing, high-tech and energy conservation, the nation's top industry regulator said on July 26.

Yao Jun, deputy head of the planning department at the Ministry of Industry and Information Technology, said manufacturing is a key destination for foreign investment in China. Though some foreign-funded enterprises are diversifying their business layouts, the overall pace of foreign investment in China has not slowed.

Yao made the comments when asked about rumors that foreign companies are withdrawing from the Chinese market.

"The (partial) relocation of manufacturing industries and the transfer of industrial chains (to other places) are normal economic phenomena, and are the result of globalization and market mechanisms," Yao said.

He said China's advanced manufacturing sector, in fact, is of greater appeal to various sources of funds. From January to May this year, the actual use of foreign capital in China's high-tech manufacturing sector increased 32.9 percent year-on-year.

China's actual use of overall foreign capital stood at 564.2 billion yuan ($83.5 billion) in the first five months, a year-on-year increase of 17.3 percent, said the Ministry of Commerce.

More than 70 percent of German enterprises with operations in China and over 60 percent of US companies plan to increase their investment in China, Yao said, pointing to reports by the China branch of the German Chambers of Commerce Worldwide Network, and the American Chamber of Commerce in China, or AmCham China.

"We will continue encouraging foreign investment in advanced manufacturing, high-tech and other fields, and use the 'green channel' and other ministry-province link services to support the accelerated implementation of key foreign-funded projects," Yao said.

Meanwhile, the MIIT will also encourage domestic enterprises to strengthen international cooperation, which will promote joint projects in equipment manufacturing and other areas, and jointly maintain the stability of global industrial and supply chains, Yao added.

The industry regulator will also step up efforts to promote the convergence of digital technologies and manufacturing as part of China's broader push to promote industrial upgrade.

Wang Zhiqin, vice-president of the China Academy of Information and Communications Technology, a government think tank, said the digital economy will become increasingly intertwined with the real economy, with the former helping the latter enter a new development stage.

On July 25, the State Council-the nation's Cabinet-said it approved establishing an inter-ministerial joint conference system for digital economy development to enhance coordination and better promote the growth of China's digital economy.