China needs to take more aggressive action to curb lending and rein in a nationwide investment binge, the government's main planning agency said in a report issued Tuesday.

The report came amid warnings that China's sizzling economy shows scant signs of slowing despite repeated efforts to bring growth down from double-digit levels.

The National Development and Reform Commission issued its call for stronger moves to tighten credit in an article published in the state-run newspaper China Securities Journal.

"The reason why investment is growing too fast is that local governments are spending excessively in an irrational and impulsive way," the report said, forecasting that the likelihood of a decline in investment in the second half of the year was "rather small."

It said China's central bank may raise interest rates on deposits and loans if the "high fever" for investment continues.

The last rate hike, in late April, raised the benchmark lending rate by 27 basis points to 5.85 percent.

The central bank should also issue bills to specific financial institutions, especially after the monthly release of economic data, to tighten the funds they have available.

Such "open market operations" induce banks into locking up large sums of money for a specified period of time in exchange for a higher than usual rate of return, taking money out of circulation.

The central bank conducts such operations routinely on Tuesdays and Thursdays and is known to have organized two non-routine bill sales so far this year to penalize banks whose loan growth was deemed too fast.

The government also might levy a special tax on investments in construction and factory equipment, known in China as "fixed assets" investments, to help discourage such spending, it said.

New Chinese currency loans are likely to total 3 trillion yuan (US$375 billion;euro293 billion) this year, the report forecast, noting that new loans totaled 1.78 trillion yuan (US$222 billion;euro174 billion) in the first five months of the year.