China's urban fixed-asset investment, which covers spending on projects like apartments, airports and power plants, climbed during the first two months of this year, showing no sign of an obvious slowdown amid the government's macro-control measures.

The investment rose 26.6 percent year-on-year to reach 529.4 billion yuan (US$65.4 billion) during January and February, the National Bureau of Statistics said yesterday.

Investment in real estate, which accounts for about a quarter of total investment, rose 19.7 percent year-on-year to 143.6 billion yuan (US$17.7 billion) in the first two months.

Investment in manufacturing rose 28.8 percent to 219.5 billion yuan (US$27.1 billion), while investment in services including telecommunications and education jumped 25 percent to 307.5 billion yuan (US$38 billion).

Zhuang Jian, a senior economist with the Asian Development Bank's Resident Mission in China, said the brisk growth was mainly because the government did not carry out new tightening measures due to increasing worries over an economic slowdown.

"The government needs a proper growth (of fixed asset investment) to maintain the country's economic growth," he said.

This year marks the beginning of the 11th Five-Year Plan, meaning a number of new projects will kick off, Zhuang said.

During the first two months, 11,723 projects began construction, an increase of 4,140 from a year ago.

The planned investment for these projects stood at 634.8 billion yuan (US$78.4 billion), an increase of 33.4 percent.

Huang Yiping, a senior economist with the Citigroup Inc in Hong Kong, said if the government wants to meet its goal of keeping the investment growth at 18 percent this year, it has to take new measures.

In fact, "if the measures addressed in the 11th Five-Year Plan are better carried out, China is capable of keeping its investment growth at the pace which is beneficial for the sustainable economic development," he said.

The government's increasing emphasis on resource utilization and environmental protection will help control investment growth, he said.

If investment in the past years in areas such as electricity and docks leads to overcapacity this year, it will also have an impact on the overall investment, he said.

China is encouraging investment in weak areas such as transport networks and power grids, but curbing expansion in industries like steel and cement.

The government wants quality growth, Huang said. But the scale of China's investment is still too big.

The country is unlikely to see a dramatic slowdown this year, he said.

Ma Kai, head of the National Development and Reform Commission, earlier said that although demand and supply were basically balanced in some industries, the potential for overcapacity could not be ignored.

(China Daily March 17, 2006)