Investment in urban fixed assets expanded at a slower pace in the first two months of this year as the central government stuck to a tight monetary policy, the National Bureau of Statistics said today.

Urban fixed-asset investment in January and February rose 24.3 percent from a year earlier to 812.1 billion yuan (US$114.4 billion), the weakest gain since February 2007's 23.4-percent growth.

It compared with the increase of 25.8 percent for last year.

"The growth is in line with our expectations as the policies to cool the economy have started to make an impact," said Li Maoyu, an analyst at Changjiang Securities Co.

Consumer prices increased to a near 12-year high of 8.7 percent last month.

Since last year, China has raised interest rates six times and asked banks to put aside more reserves on 11 occasions to combat inflation and cool the economy.

Li estimated that FAI expansion would continue to slow this year as the policies show more effect.

Spending on agriculture expanded 77 percent to 5.4 billion yuan in the first two months as the government beefed up efforts to subsidize farming and to rescue the industry after the worst snowstorms in five decades.

Investment in manufacturing rose 26.1 percent to 335 billion yuan while service sector investment grew 22.6 percent to 471.7 billion yuan.

Among the subcategories, spending on coal exploration and production increased 31.1 percent to 5.3 billion yuan while petroleum and natural gas saw spending rise 9.8 percent to 12.2 billion yuan.

(Shanghai Daily March 14, 2008)