Fixed-asset investment still rising

Fixed-asset investment rose 30.3% year-on-year in the first five months of 2006, the National Bureau of Statistics announced Thursday. Hot on the heels of data showing continued rises in bank lending and a broad money supply well in excess of government targets, the announcement served to fuel expectations that further tightening measures will be introduced. With fixed-asset investment accounting for about 40% of China’s economic growth and a still-expanding trade surplus, many economists have already increased their full-year GDP growth forecasts, the Financial Times reported. The source of the continued rise is said to be excessive liquidity in the economy, which is driven by foreign currency inflows in the form of foreign direct investment, trade and speculative movements. Control measures likely to be used include an increase in the reserve ration for banks, effectively limiting the amount of money they can lend.