Chinese Mandarin - Investment growth still on fast track in May

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Investment growth still on fast track in May

By Zhang Yu (China Daily)
Updated: 2007-06-16 06:48

China's investment growth maintained its upward trend in May in line with
forecasts, driving the economy to the brink of overheating after all
major indicators accelerated.

Fixed-assets investment in urban areas rose 25.9 percent in the first
five months from a year earlier to 3.2 trillion yuan, the fastest growth
rate of this year, according to data released on Friday by the National
Bureau of Statistics (NBS).

It was one of a group of figures released this week by the NBS indicating
the economy's risk of overheating, including 3.4 percent consumer price
index growth and 18.1 percent industrial production expansion.

"The major economic indicators in May all grew at a fast pace, from which
we can see that China's gross domestic product in the second quarter will
keep its high-speed growth trend of the first quarter," said Zhuang Jian,
an economist at the Asian Development Bank.

Zhuang said China's economic growth pattern "saw no difference from
before, and is still driven by investment and exports".

"The resource-dependent growth will not be sustainable and will cause
difficulties for safety production, environmental protection and living
standards for workers," he said.

Resource industries were at the top of investment growth in May.
Investment increases in non-metal mining and products, non-ferrous metal
mining and products, as well as oil and gas reached 52.6 percent, 40.7
percent, and 23.3 percent, respectively.

"Due to the heavy pressure of the investment rebound, the central
government may enforce cooling measures in those resource-intensive
industries like cement and glass," said Chen Jijun, an analyst from CITIC
Securities.

According to the NBS, real estate investment expanded 27.5 percent to
721.4 billion yuan in the first five months from a year earlier.

Meanwhile, the National Development and Reform Commission reported on
Thursday that average housing prices in China's large and medium-sized
cities surged to 6.4 percent from 5.4 percent in April.

"The amount and growth rate of the real estate sector, which has been
dwarfed by the bullish stock market since late last year, remains at a
high level," said Zhuang. "The May housing price hike in Shanghai
highlighted the revival of the real estate market."

(China Daily 06/16/2007 page10)

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