The figures indicate that this year's tightening measures, including hikes in interest rates, have done little to curb fixed asset investment, especially by large state-owned organizations.

The January-October increase in fixed asset investment was 0.1 percentage point higher than the growth rate in the same period last year and 0.5 percentage point higher than the January-September figure, said the NBS.

Of the total, 107 billion yuan went into primary industry (farming, fishing, forestry and similar items), up 39.9 percent. Secondary industry (processing and manufacturing) accounted for 3.9 trillion yuan, up 29.6 percent, and tertiary industry (services) 4.9 trillion yuan, up 24.7 percent.

Investment in state-owned and state-held enterprises was 3.88 trillion yuan, up 16.6 percent. Investment in real estate was 1.92 trillion yuan, up 31.4 percent.

The first ten months saw construction of 191,086 new projects begin, 22,518 more than the same period last year. Planned investment in these new projects was 6.67 trillion yuan, up 26.5 percent.

"The government increased the cost of investment to discourage the start of new projects," said Song Guoqing, a researcher with Peking University. However, Song said, higher interest rates "put small and medium-sized private enterprises under considerable pressure, but had little effect on large state-owned firms."

The central bank has raised the benchmark one-year lending rate on five occasions this year, to 7.29 percent at present. The government has also raised the commercial bank reserve ratio on nine occasions, issued bonds to absorb cash and loosened controls on capital outflows.

Fixed asset investment is influenced by many factors: government policies, enterprise development and international demand.

Song said the government should focus on preventing excess construction that exceeds real demand and leads to over-capacity.

Zhu Zhixin, vice-minister of the National Development and Reform Commission (NDRC), has warned that the risk of overheating persists. Zhu has also said that containing inflation should be a macroeconomic priority.

The NBS said earlier this week that inflation, as measured by the consumer price index, was 6.5 percent year-on-year in October.

Zhang Hanya, Director of the Research Institute of Investment with the NDRC, said that increased real estate spending was a major reason why fixed asset investment had grown.

Robust demand, tight supply and higher land development costs drove up housing prices in 70 major mainland cities by 9.5 percent year-on-year in October, according to a survey by the NBS and the NDRC.

"Overall economic growth is stable and fixed asset investment growth is within market expectations," the director said.

Many analysts had expected that the central bank would raise interest rates again as early as Friday to reduce liquidity. They also suggested that the central bank should use other measures, such as special treasury bond sales and higher reserve ratios for specific commercial banks with faster-than-average credit growth.

Li Huiyong, a senior analyst at Shenyin & Wanguo Securities, said that the next interest-rate hike would likely be this year's last. Zhao Xijun, a professor at the School of Finance at Renmin University, said that the central bank would wait for the November and December inflation figures before deciding whether more rate hikes were needed.

(Xinhua News Agency November 16, 2007)