China's urban fixed-asset investment rose 25.6 percent to 4.0264 trillion yuan (575.2 billion U.S. dollars) in the first five months of 2008 compared to the same period a year earlier, the National Bureau of Statistics (NBS) said in Beijing Tuesday.
The growth figure was 0.3 percentage points lower from the same period last year, and 0.1 percentage points lower than the Jan-April period this year.
"The growth was broadly in line with market expectations and reflected the government's efforts to prevent the economy from getting overheated," said Hu Yanni, a CITIC Securities Research analyst.
Hu said the deadly May 12 quake in Sichuan Province would have a short-term negative impact on fixed-asset investment, while speeding up the investment pace in the long run with the surge in demand on infrastructure rebuilding and temporary settlement construction in the affected regions.
Li Daokui, a Tsinghua University economist, said the investment was not apparently overheated, but the government should be cautious as it was likely to rebound in the second half to add to inflationary pressures.
The NBS reported earlier this month that inflation, as measured by the consumer price index (CPI), was up 7.7 percent in May over the same month last year. In April, it rose 8.5 percent after a 12-year high of 8.7 percent in February.
Meanwhile, there were worries the CPI would accelerate because of rising factory-gate prices, analysts said.
The producer price index (PPI), which measures the value of finished products when they leave the factory, rose 8.2 percent inMay over the same month last year. The rise was 0.1 percentage points higher than April's 8.1 percent.
Investment in state-owned and state-controlled enterprises was 1.6397 trillion yuan, up 18 percent. Investment in the real estate sector grew 31.9 percent to 951.9 billion yuan, the NBS said.
Primary industry (farming, fishing, forestry and the like) continued to grow the fastest among industrial sectors, expanding 66.1 percent during the first five months. That compared with secondary and tertiary industries, whose investment rose 25.6 percent and 25 percent, respectively.
Zhang Xiaojing, a Chinese Academy of Social Sciences analyst, said the 71-percent surge in primary industry investment was a positive sign. It showed the government's move to shore up agricultural development was effective.
Investment by the central government expanded 18.5 percent year-on-year to 369.9 billion yuan and that by local governments was up 26.4 percent to 3.6566 trillion yuan.
The first five months saw the commencement of 84,368 projects, 9,667 more than the same period last year. Planned investment in these new projects was 2.721 trillion yuan, down 2.5 percent.
Fixed-asset investment is a main gauge of spending on new productive capacity and has been rising rapidly, fuelled by the ample liquidity in the country.
The government has taken a series of measures to drain liquidity as it tries to maintain a more sustainable economic growth and curb inflation.
In its latest effort to rein in credit growth, the central bank announced it would raise the reserve-requirement ratio for commercial banks by 1.0 percentage point in two stages this month to a new high of 17.5 percent.