Fixed-assets investment is showing no sign of slowing, with year-on-year growth of 26.7 percent from January to August, according to figures released on Friday.
The National Bureau of Statistics said on Friday 6.6 trillion yuan was pumped into new projects in the period, and more than one-fifth of the money was channeled into real estate.
The pace picked up from the January-July rate of 26.6 percent after investment growth dipped slightly in July due to extreme weather, especially flooding, according to Goldman Sachs' Asia Economics Research Group.
Fixed-assets investment growth has slowed from around 30 percent last year to the current 26.7 percent in the previous eight months. But it is still higher than the 25 percent set by economists as the warning line.
Property developers and local governments are still driving fast-paced growth, according to statistics. The central government has listed curbing fast investment, the trade surplus and high inflation as its major targets for macroeconomic control since 2003.
Together with other economic indicators made public this week, Friday's new figures indicate the government's tightening measures have failed to meet their targets. The statistics bureau said on Wednesday that China's consumer price index for August had reached an 11-year high of 6.5 percent.
Meanwhile, property prices are still going up. The National Development and Reform Commission said the average housing price in 70 major cities had increased by 8.2 percent in August compared with the same period last year.
Property developers poured 1.42 trillion yuan into the economy in the first eight months, 29 percent more than the same period last year.
Lin Yueqin, a researcher with the Chinese Academy of Social Sciences, said the latest figures are a cause for concern. "It's a dangerous sign that inflation and property prices have been rising at the same time," said Lin.
He said local governments are the main drivers of the investment spree as their performance assessment system puts emphasis on economic achievements. Local governments' fixed-assets investment has risen 28.4 percent year-on-year, while that of the central government grew 13.2 percent in the past eight months.
The investment growth rate of local government was about 27.9 percent in the first seven months of the year, while that of the central government was 15.4 percent.