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Urban fixed investment rebounded significantly in April, adding to fears that the economy may be in danger of overheating. The figure hit 2.26 trillion yuan (US$294 billion) in the first four months, up 25.5 percent on the same period last year, the National Bureau of Statistics said yesterday. It not only exceeded the 2006 full-year growth rate of 24.5 percent but also was 0.2 percentage points higher than in the first quarter. "This has followed the typical pattern: Fixed-asset investment growth usually accelerates in the second quarter after the Chinese New Year as firms get new credit from banks and workers go back to normal work schedules after the holidays," Sun Mingchun, an economist with Lehman Brothers, said. The number of new investment projects rose 2,121 to "Also, high profits and strong bank lending growth point ready availability of funds for fixed investment," said Sun. Industrial enterprises' profits jumped 43.8 percent in the first two months this year, 22 percentage points higher than in the same period last year. Meanwhile, domestic banks granted 422 billion yuan in new loans in April, bringing the amount for the first four months to 1.8 trillion yuan - more than half the total for the whole of 2006. Some industries far outpaced overall investment growth in the January-April period, with non-metal mining investment soaring 48.3 percent and the ferrous metal sector up 47.2 percent, according to the statistics bureau. Rapid investment growth in such high-energy-consuming sectors will undermine "The acceleration of real estate investment also calls for more tightening measures from the government to cool down the overall economic growth," Zhang Qi, deputy director of the Investment in real estate rose 27.4 percent to 526.5 billion yuan in the four months, again serving as a locomotive of investment growth. "Real estate investment appeared to have bottomed out since year-on-year growth slowed from more than 40 percent in early 2004 to about 20 percent early last year as a result of macroeconomic controls," Zhang said. "The latest acceleration would need more tightening measures to rein in investment growth," he siad. Besides, retail sales rose 15.5 percent in April, highlighting strong consumer spending. The trade surplus for the first four months increased to US$63.3 billion, 88 percent more than a year earlier. Given these conditions, accelerated investment growth will further add to the country's difficulties in preventing the economy shifting from fast growth to overheating, said Zhang. The economy registered a higher-than-expected growth of 11.1 percent in the first quarter. (
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