Total fixed-assets investment, a key gauge of domestic demand, amounted to 193.6 billion yuan (US$23.3 billion) in January and February, the bureau said in a statement.

Of that, 93.9 billion yuan (US$11.3 billion) was spent on infrastructure projects, a year-on-year increase of 27.7 per cent.

Spending on renovation and upgrades rose a year-on-year 41.8 per cent to 32 billion yuan (US$3.9 billion), while that on real estate development rose a year-on-year 37 per cent to 59.8 billion yuan (US$7.2 billion).

Economist Zhou Jingtong said the country's fixed-assets investment, would not remain at 32.8 per cent growth throughout the year, but would grow at a higher rate.

"The world economy will continue to improve this year," said Zhou of the State Information Centre. "This helps create a better international environment, which is important for the level of domestic investment and China's economic development."

The new government will also implement a series of measures to continue pro-active fiscal and monetary policy to expand domestic demand, he said.

Zhu Zhixin, commissioner of the National Bureau of Statistics, said last month: "So long as the world economic situation remains good and there are no big fluctuations, I believe our economic growth this year will be more than 7 percent."

Earlier, a report from the Macro Economic Research Institute under the State Development Planning Commission revealed the Chinese economy would grow 7.6 to 7.8 percent in 2003.

"The faster economic development will lay solid foundations for the growth of fixed-assets investment," Zhou said.

Meanwhile, the increased efficiency of enterprises since the beginning of last year, resulting from the rise in oil prices and the accelerated pace of industrial output and exports, provided strong support for companies to invest, he said.

The reform of the administrative approval system over the past years also helped improve the market environment, which is beneficial to fixed-assets investment.

However, a number of factors will continue to have a negative effect on the country's fixed-assets investment, including difficult access to bank loans for small and medium-sized companies and the relatively low price levels since the beginning of last year.

Fixed-assets investment is likely to rise about 18 percent for 2003, he said.

(China Daily March 19, 2003)