China Says Its Investment In Factories Surged By 31 Percent In First Half

BEIJING (AP) - China's investment in factories and other urban fixed assets soared by a stunning 31.3 percent in the first six months of the year, the government said Thursday, highlighting official worries that a building boom could ignite a financial crisis.

The growth rate was even faster than the 27.1 percent pace in the same period of last year, the National Statistics Bureau said, suggesting that an increase in interest rates and other government efforts are failing to rein in the boom.

Chinese leaders have warned that a surge in lending for building projects could ignite inflation, while banks could face financial problems if developers of unneeded assets default.

The government reported this week that economic growth surged to 11.3 percent in the second quarter, driven by the building boom.

Beijing has tried to block new projects by tightening lending rules and banning some types of construction. But officials are often reluctant to enforce limits that might hurt local companies.

Economists expect China to respond by raising interest rates again and possibly allowing a rise in the value of its currency, the yuan, in an effort to cool off growth.

Also Thursday, the government's customs agency reported that Chinese oil imports soared 17.6 percent in the first half of the year, according to the official Xinhua News Agency.

China already is the world's third-largest oil importer after the United States and Japan. Imports have soared in recent years, prompting complaints that Chinese consumption is driving up world oil prices.

Beijing has tried to rein in rising fuel consumption by boosting state-set market prices for gasoline and other products, but they are still below world levels.

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