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UPDATE 2-China 2017 non-financial ODI posts first decline since records began

* Dec non-financial ODI rises 49 pct y/y to $12.53 bln

* 2017 non-financial ODI falls 29.4 pct to $120.08 bln

* Dec FDI drops 9.2 pct y/y to 73.94 billion yuan

* 2017 FDI rises 7.9 pct y/y to 877.56 billion yuan (Adds milestone)

BEIJING, Jan 16 (Reuters) - China last year posted its first decline in non-financial outbound direct investment since it began publishing the data in 2003, as firms backed off from speculative overseas investment amid a government crackdown.

Non-financial outbound direct investment in 2017 fell 29.4 percent on the year to $120.08 billion, the commerce ministry said on Tuesday.

Outbound direct investment (ODI) in December alone rose 49 percent on the year to $12.53 billion, a Reuters calculation on official data showed, extending gains from November's annual growth of 34.9 percent.

The positive ODI growth in the past two months has been fuelled largely by China's increased investments in the manufacturing and information sectors, the ministry said, while no new Chinese investments went to the property, sports and entertainment industries.

"Irrational" overseas investment has been effectively contained, added the commerce ministry.

Overseas investment by Chinese firms has fallen sharply since Beijing in late 2016 levied strict controls on capital leaving the country.

China says it continues to encourage genuine overseas deals but has vowed to limit investment in overseas property, hotels, entertainment, sports clubs and film industries it suspects is more speculative and aimed at evading tight capital controls.

Investment in countries involved in China's Belt and Road initiative, an extensive infrastructure plan meant to link Asia with the Middle East and Europe, totalled $14.36 billion in 2017, the commerce ministry said.

Belt and Road deals accounted for 12 percent of total investments in 2017, up 3.5 percentage points from a year earlier.

Analysts expect that after the tumble in ODI in 2017, China is likely to see an increase in overseas investment deals this year.

"The yuan's appreciation has provided some impetus for Chinese firms to do deals overseas", said Iris Pang, Great China economist at ING.

Around the second quarter, it can be expected that China is clearly having big capital inflows, "so that SAFE can approve more overseas deals," she said.

SAFE is the acronym for the State Administration of Foreign Exchange.

China's yuan currency has risen about 1.2 percent against the dollar this year, after a gain of roughly 6.8 percent in 2017, reversing three straight years of depreciation.

Foreign direct investment (FDI) into China in December fell 9.2 percent from a year earlier to 73.94 billion yuan ($11.49 billion), the first decline in five months.

For 2017, FDI rose 7.9 percent to 877.56 billion yuan.

China faces relatively big external pressure in attracting FDI this year due to uncertainties in the global investment environment, the commerce ministry added. (Reporting by Stella Qiu and Beijing Monitoring Desk; Editing by Richard Borsuk and Clarence Fernandez)