China's investment growth maintained its upward trend in May in line with forecasts, driving the economy to the brink of overheating after all major indicators accelerated.

Fixed-assets investment in urban areas rose 25.9 percent in the first five months from a year earlier to 3.2 trillion yuan, the fastest growth rate of this year, according to data released on Friday by the National Bureau of Statistics (NBS).

It was one of a group of figures released this week by the NBS indicating the economy's risk of overheating, including 3.4 percent consumer price index growth and 18.1 percent industrial production expansion.

"The major economic indicators in May all grew at a fast pace, from which we can see that China's gross domestic product in the second quarter will keep its high-speed growth trend of the first quarter," said Zhuang Jian, an economist at the Asian Development Bank.

Zhuang said China's economic growth pattern "saw no difference from before, and is still driven by investment and exports".

"The resource-dependent growth will not be sustainable and will cause difficulties for safety production, environmental protection and living standards for workers," he said.

Resource industries were at the top of investment growth in May. Investment increases in non-metal mining and products, non-ferrous metal mining and products, as well as oil and gas reached 52.6 percent, 40.7 percent, and 23.3 percent, respectively.

"Due to the heavy pressure of the investment rebound, the central government may enforce cooling measures in those resource-intensive industries like cement and glass," said Chen Jijun, an analyst from CITIC Securities.

According to the NBS, real estate investment expanded 27.5 percent to 721.4 billion yuan in the first five months from a year earlier.

Meanwhile, the National Development and Reform Commission reported on Thursday that average housing prices in China's large and medium-sized cities surged to 6.4 percent from 5.4 percent in April.

"The amount and growth rate of the real estate sector, which has been dwarfed by the bullish stock market since late last year, remains at a high level," said Zhuang. "The May housing price hike in Shanghai highlighted the revival of the real estate market."

(China Daily 06/16/2007 page10)

(For more biz stories, please visit Industry Updates)