Factory Investment Continues To Rise

China's spending on factories, equipment and property climbed 26.7 percent in the first eight months of 2007 according to the statistics bureau today.

The world's fourth-largest economy expanded 11.9 percent in the second quarter from a year earlier, the fastest pace since 1994. The trade surplus grew 33 percent in August to $24.97 billion. Inflation jumped to 6.5 percent.

From January to August, urban investment in fixed assets hit 6,665.9 billion yuan, a rise of 26.7 percent year-on-year. Of the total, state -owned and state controlled enterprises invested 2,877.7 billion yuan, surging 16.7 percent; real estate development enterprises valued at 1,427.7 billion yuan, rose by 29.0 percent.

In terms of jurisdiction of management, central investment stood at 643.5 billion yuan with growth rate of 13.2 percent as compared with previous year; that of local investment totaled 6,022.4 billion yuan, jumping 28.4 percent.

In terms of different industries, investments of primary, secondary, and tertiary industry amounted to 78.3, 2,962.6 and 3,625 billion yuan, expanding 42.9, 29.5 and 24.3 percent respectively, year-on-year.

In terms of different sectors, investments of mining and washing of coal stood at 90.8 billion yuan, a year-on-year rise of 22 percent; that of extraction of petroleum and natural gas grew to 108.1 billion yuan, increasing 10.5 percent; that of manufacture of non-metallic mineral products, smelting and pressing of ferrous metals, smelting and pressing of non-ferrous metals respectively valued at 162.1, 149.9 and 74.1 billion yuan, jumping 49.6, 12.9 and 29.2 percent; that of production and supply of electricity and heat, railway transport arrived at 460.7 and 119.3 billion yuan, climbing 11.5 and 3.4 percent year-on-year.

In terms of registration status, investments of domestic funds enterprises stood at 5,909.3 billion yuan, surging 27 percent over that in the same period last year; that of enterprises with funds from Hong Kong, Macao and Taiwan valued at 322.4 billion yuan, rising 32.5 percent; and that of foreign funded enterprises standing at 397.6 billion yuan, up 17.1 percent, year-on-year.

In terms of buildings under and new constructions, by the end of August, the cumulative number of urban construction projects over 500,000 yuan was 237,000, a year-on-year increase of 29,286; that of total investment planned in project under construction stood at 211,981 trillion yuan, climbing 17.9 percent; that of number of project started this year valued at 149,751, a year-on-year rise of 18,665; that of total planned investment of newly projects was 5,194.2 billion yuan, a rise of 16.7 percent.

In terms of volume of positioned funds, investment in urban areas hit 7,677.8 billion yuan, a year-on-year rise of 27.1 percent. Of which, domestic loans, foreign investment, and self-rising funds rising 12.7, 16.3 and 32.2 percent respectively, year-on-year.

People's Bank of China Raises Interest Rates

The People’s Bank of China raised interest rates for the fifth time since March today in an effort to curb the fastest inflation since 1996 and damp speculation in stocks and real estate.

The benchmark one-year lending rate will increase to a nine-year high of 7.29 percent from 7.02 percent, starting tomorrow, the central bank said today on its Web site. The rate has risen from 6.12 percent on March. here is the rather terse text of the communique:


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In order to strengthen liquidity management in the banking system and check the excessive growth of monetary credit, the People’s Bank of China has decided to raise the RMB reserve requirement ratio for depository financial institutions by 0.5 percentage points as of September 25, 2007.

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Money supply grew 18.1 percent in August, exceeding the central bank's annual target of 16 percent for the seventh straight month. Urban fixed-asset investment climbed 26.7 percent in the first eight months of this year.

August Industrial Output Growth Slows

China's industrial production rose 17.5 percent in August, slowing for a second month after the government increased taxes on exports. The increase was down from an 18 percent gain in July.The slowdown may be insufficient to deter the central bank from raising interest rates for a fifth time this year after inflation surged to an almost 11-year high and the trade surplus widened to the second-highest on record.

China's trade surplus widened 33 percent in August from a year earlier to $24.97 billion.

Foreign direct investment in China climbed 12.8 percent through August from a year earlier. Spending rose to $41.9 billion, the Ministry of Commerce said today at a briefing in Beijing. The pace slowed from a 12.9 percent increase in the first seven months. For August alone, investment jumped 11.9 percent to $5.1 billion.

China was the world's fourth-largest recipient of foreign direct investment in 2006 after the U.S., U.K. and France according to the United Nations. Spending by overseas companies climbed 4.5 percent from a year earlier to $63 billion. Including the financial industry, investment fell 4.1 percent to $70 billion.

Disposable incomes among urban households climbed 14.2 percent in the first half from a year earlier.

Inflation Continues To Rise in August

Soaring food prices propelled China’s annual consumer price inflation to 6.5 per cent in August, the fastest pace in nearly 11 years, raising expectations that the central bank will defy the global trend and keep raising interest rates. The inflation rate published today, up from 5.6 per cent in July, was the highest reading since December 1996.

Also, according to the National Bureau of Statistics proucer prices keep rising too:

In August, Producers’ Price Index (PPI) for manufactured goods up by 2.6 percent from the same month last year; purchasing prices for raw material, fuels and power rose by 3.8 percent.

PPI for means of production increased 2.2 percent over last August. Of the total, PPIs for mining and quarrying industry increased 1.4 percent; that for raw materials industry and manufacturing industry correspondingly up by 3.9 and 1.5 percent; that for means of consumer goods grew 3.5 percent. Of which, price for foodstuff increased 8.6 percent; that of clothing and commodities rose 1.2 and 1.8 percent respectively, while that for durable consumer goods dropped 0.5 percent.

Fixed asset investment continues to be very high:

From January to July, urban investment in fixed assets hit 5,669.8 billion yuan, a rise of 26.6 percent year-on-year. Of the total, state -owned and state controlled enterprises invested 2,431.7 billion yuan, surging 16.5 percent; real estate development enterprises valued at 1,213.5 billion yuan, rose by 28.9 percent.

and In July, the total retail sales of consumer goods reached 699.8 billion yuan, a year-on-year increase of 16.4 percent.



While in August, according to a news release today China's retail sales grew at the fastest pace in more than three years, buoyed by higher prices and rising incomes in what must surely be the world's fastest-growing major economy. Sales climbed 17.1 percent in August from a year earlier to 711.7 billion yuan ($95 billion) after gaining 16.4 percent in July.