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China's Factory, Construction Spending Jump 27 Percent

National Statistics Bureau said investment in construction, factory equipment and other such assets totaled $1.1 trillion amid reconstruction after May's earthquake.

SHANGHAI, China (AP) -- China's spending on real estate and other fixed urban assets rose 27.3 percent in the first seven months of the year compared with the same period a year ago, the National Statistics Bureau reported Friday.

The spending accelerated amid reconstruction of areas devastated by May's earthquake. The bureau said investment in construction, factory equipment and other such assets totaled 7.2 trillion yuan ($1.1 trillion) in January-July.

The growth rate was greater than the 26.8 percent rise in property and asset investment in the first half of the year.

Regulators have repeatedly raised interest rates and tightened lending policies, seeking to curb a boom in such investments, which they fear could precipitate a financial crisis and hamper efforts to cool inflation.

However, with exports expected to slow, the authorities have eased such constraints.

Construction spending has also increased amid efforts to rebuild following a massive earthquake that struck central China in May, killing nearly 70,000 people and leaving 5 million homeless.

Despite mounting worries that booming China might catch the malaise afflicting other major economies, data from July showed scant evidence of any slowdown.

China's retail sales growth rose to a new decade-high 23.3 percent in July over the same month of 2007, up from June's 23 percent growth. Meanwhile, the trade surplus swelled in July to its highest level in 10 months, although analysts expect export growth to decline due to weaker global demand.

"These figures show that our country's economy is still maintaining fast but balanced growth," Wang Tongsan, an economist at the Chinese Academy of Social Sciences, said in a commentary posted on the Statistics Bureau's Web site.

Wang acknowledged, however, that price inflation also contributed to the strong increase.

A recent report by the World Bank noted that while the nominal rate of growth in investments in factories and construction remained above 25 percent in Jan.-May, adjusted for inflation the real growth in such spending was about 16 percent.

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