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Urban FAI sees massive increase

CHINA'S urban fixed-asset investment soared 30.3 percent last month from a year earlier, official data showed yesterday, as the government's stimulus package and a substantial rise in loans boosted spending.

Merrill Lynch economists said real growth for last month could be as high as 35 percent due to negative producer price inflation.

For the first quarter, urban FAI in projects such as railways and factories rose 28.6 percent to 2.36 trillion yuan (US$346 billion), the National Bureau of Statistics said. It was up 25.9 percent in the first quarter last year.

By region, urban FAI jumped 46.1 percent in the west in the first quarter and 34.3 percent in central areas, against 19.8 percent in the east, said Li Xiaochao, a spokesman for the bureau.

The total FAI for the quarter climbed 28.8 percent to 2.81 trillion yuan.

China in November unveiled a 4-trillion-yuan stimulus package, largely focusing on infrastructure projects, to sustain economic growth and offset the sluggish export sector amid a global recession.

"As we can see from the first-quarter data, the fiscal stimulus and the highly expansionary monetary policy have already led to a rebound in growth and should lead to a continued rise in investment, reducing the need for a second stimulus package or further interest rate cuts," said UBS economist Wang Tao.

China International Capital Corp economist Ha Jiming agreed FAI would keep rising in the second quarter and the third, but noted spending in the property and export-related manufacturing sectors could remain weak.

Meanwhile, growth in China's industrial production rebounded to 8.3 percent last month from 3.8 percent for the first two months, the bureau said, amid a rapid investment increase and a smaller contraction in exports. In the first quarter, the industrial output rose 5.1 percent year on year, but the rise is 11.3 percentage points lower from the first three months of last year.

China's industrial output rose 12.9 percent last year.

Li said the first-quarter output of heavy industry grew 4.5 percent from a year earlier and that of light industry 6.8 percent.

East China posted a year-on-year industrial output growth of 3.7 percent, central areas 5.2 percent and western regions 11.8 percent.


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