(Xinhua)
Updated: 2007-11-16 13:58

China's investment in construction, factory and other urban fixed assets rose 26.9 percent to 8.9 trillion yuan (US$1.2 trillion) in the first ten months, said the National Bureau of Statistics (NBS) on Friday.

The increase was 0.1 percent higher than the growth rate in the same period last year and 0.5 percent higher than the January-September figure, said the NBS.

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Of the total investment in urban areas, 107 billion yuan went into primary industry (farming, fishing, forestry etc), up 39.9 percent; secondary industry (processing and manufacturing) accounted for 3.9 trillion yuan, up 29.6 percent, and tertiary industry (services) 4.9 trillion yuan, up by 24.7 percent.

Investment in State-owned and State-holding enterprises was 3.88 trillion yuan, up by 16.6 percent. Investment in real estate was 1.92 trillion yuan, up by 31.4 percent.

The first ten months saw construction of 191,086 new projects begin, 22,518 more than the same period last year. The planned investment in new projects was 6.67 trillion yuan, up 26.5 percent.

"The government increased the cost of investment to discourage the start of new projects," said Song Guoqing, a researcher with Peking University. "It put small and medium-sized private enterprises under considerable pressure, but had little effect on large state-owned firms."

The central bank raised the benchmark one-year lending rate on five occasions this year to the present 7.29 percent. Meanwhile, the government has ordered commercial banks to keep more reserves on nine occasions, issued bonds to absorb cash and loosened control on capital flowing abroad.

Fixed assets investment is influenced by wide-ranging factors including government policies, enterprise development and international demand.

Song said the government needed to focus on avoiding repeated construction (construction which exceeds social demand and causes over-capacity).

Zhu Zhixin, vice-minister of the National Development and Reform Commission, has warned that the risks of an overheated economy remained, and preventing excessive rises in consumer prices should be a major macro-economic control priority.

The NBS said earlier this week that inflation reached 6.5 percent year-on-year in October.