A construction site in Beijing on March 24,
2007. China's urban fixed asset investment totaled 2.26 trillion yuan
in the first months of the year, an increase of 25.5 percent from the same
period last year, the National Bureau of Statistics said Thursday.
China's urban fixed asset investment picked up in the first four months of
the year, adding to the pressure for an interest rate hike to prevent potential
From January to April, the country's urban fixed asset investment totaled
2.26 trillion yuan, an increase of 25.5 percent from the same period last year,
the National Bureau of Statistics said Thursday in a statement on its website.
The growth rate was slightly higher than the 25.3 percent year-on-year
increase in the first three months.
The real estate sector witnessed an investment jump of 27.4 percent to 526.5
billion yuan during the January-April period, said the bureau.
Investment in the first, second and tertiary industries soared 29.2 percent,
27.4 percent and 24 percent, respectively.
This figures are the latest in a series of data that reinforce the case
for another interest rate increase which, analysts said, may happen as early as
this month given concerns about asset prices bubbles and potential overheating.
Strong bank lending
Industrial output rose 17.4 percent in April after climbing 17.6 percent in
March, the bureau said on Wednesday.
Bank lending was also strong. Banks extended 422 billion yuan in new loans in
April, bringing the amount for the first four months to 1.85 trillion yuan -
more than half the total for the whole of 2006.
In April, M2, the broad measure of money supply, slowed down to 17.1 percent
from 17.3 in the previous month, the central bank said, but it still remains
well above the People's Bank of China's full-year target of 16 percent.
Inflation, measured by the consumer price index, grew three percent in April,
barely meeting the central bank's target, but hovering above the benchmark
one-year deposit interest rate for the third straight month.
The negative interest rate is encouraging Chinese citizens to divert large
amounts of bank savings into stocks.
Household deposits decreased by 167.4 billion yuan (US$21.7 billion) in
April, compared with an increase of 60.6 billion yuan (US$7.9 billion) at the
same time last year, the central bank said on Sunday.
Meanwhile, household loans went up 123.6 billion yuan, a year-on-year
increase of 63 billion yuan, according to the bank.
Given the lack of a substantial jump in consumption, analysts said, a major
part of deposits and loans may have flowed into the stock market which has
surged more than 50 percent so far this year on top of a 130 rally in 2006.
Asset bubble building
A total of 4.79 million new A-share trading accounts were opened in April,
853,500 more than the combined total for the previous two years, according to
statistics from the China Securities Depository and Clearing Corporation.
The wave of new money has consistently pushed the Shanghai and Shenzhen
markets to new highs.
The benchmark Shanghai Composite Index broke the psychologically important
barrier of 4,000 points last Wednesday, less than two months after surpassing
the 3,000-point mark.
The sharp gains are once again raising worries about bubbles developing in
the equity market.
The bubbles building in the stock market is a concern, said central bank
governor Zhou Xiaochuan last week.
The People's Bank of China has raised interest rates three times since April
last year, ordering lenders to set aside more money for reserves and sold bills
to soak up cash.