[photopress:real_estate_china_fixed_asset_investment.jpg,full,alignright]Chinese urban fixed asset investment gained pace in the first 10 months of 2007, raising expectations of an interest rate hike.
The National Bureau of Statistics said fixed asset investment — a key measure of spending on infrastructure, plants and other major projects — rose 26.9% to RMB8.9 trillion (US$1.2 trillion).
Li Huiyong, an economist with Shenyin Wanguo Securities based in Shanghai said, ‘We think the government will hike interest rates… to curb inflation.’
Other bullish data this week included a record high trade surplus of US$27.1 billion. But the inflation figures, which included a 17.6% jump in food prices in October, are causing the most official concern.
The central government in Beijing has already raised interest rates five times this year in a bid to prevent overheating, but the economy has continued to surge, expanding by 11.5% in the third quarter.
Qiu Qingdong, a Beijing-based analyst with Guodu Securities said, ‘It seems previous interest rate hikes have not had any major impact on money supply. Macroeconomic policies so far have not been very effective.’
JP Morgan Chase Bank said in a note to clients, ‘Solid growth momentum in the real economy has shown limited slowing amid excess liquidity conditions in the financial system’.