A report from China's economic watchdog has warned that fixed assets continue to lead runaway investment growth into overheating.

The National Development and Reform Commission (NDRC) said overall fixed assets investment during the first half of 2006 grew 29.8 percent to 4.24 trillion yuan (US$530 billion). This is 4.4 percentage points higher than the same period last year.

Meanwhile, nearly 100,000 new construction projects were commenced which is 18,000 more than the first half of last year.

Some industries showed signs of overheating. Investment in textiles surged by 40.6 percent and automobiles by 44.5 percent in the first half of the year. .

Some projects deviated from the state's industry plan and too many were similar, the report said.

The problems were attributed to local governments' blind pursuit of rapid economic development which was excessively driven by growth in fixed assets investment and rampant illegal land use exacerbated things, the report observed. 

It suggested efforts to curb the soaring fixed assets investment could include stricter controls on the number of new projects, more stringent land use management, tighter bank lending and a more efficient investment structure.

(Xinhua News Agency August 2, 2006)