Chinese Factory Investments Climb

Spending rose $420 billion from January-May, prompting calls to cool off the economy.

BEIJING (AP) - Chinese investment in factories and other urban assets soared in the first five months of the year, according to official figures released Friday, adding to pressure for a new interest rate hike to cool the sizzling economy.

Chinese leaders have raised interest rates twice since mid-March and imposed investment curbs in an effort to slow a boom that they worry could spark inflation or a debt crisis.

Spending on factories, real estate and other fixed urban assets jumped 25.9 percent in January-May to 3.2 trillion yuan (US$420 billion), according to the National Bureau of Statistics. The agency gave no monthly figure for May.

The growth rate outpaced analysts' expectations.

China grew 11.1 percent in the first quarter and is expected to top 10 percent this year for a fifth straight year, driven by exports and capital investment.

Chinese leaders want fast growth to reduce poverty but are trying to rein in investment in industries such as real estate, auto manufacturing and textiles where supply exceeds demand.

The government said Thursday that China's industrial output jumped by 18.1 percent in May.

The export boom has sent a flood of money coursing through China's economy, straining the government's ability to contain pressure for prices to rise. The central bank drains billions of dollars a month from the economy through bond sales, piling up foreign reserves that now exceed US$1.2 trillion.

China's cabinet said Wednesday it would use tax and fiscal policies to control the boom.

''Monetary policy should be appropriately tightened while kept stable, fostering stable, relatively fast economic growth,'' the cabinet said in a statement.

In another sign of continued strong economic growth, a state news agency said Friday that China's oil imports rose by 11.5 percent in the first five months of the year.

China is the world's No. 3 oil importer after the United States and Japan. Chinese leaders see growing reliance on imports as a strategic weakness, and are promoting nuclear power and other alternative energy sources in an effort to slow import growth.

Oil imports from January to May totaled 471 million barrels, the Xinhua News Agency said, citing government customs data.


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