Cheap labour costs are attracting a growing number of foreign firms

During the first seven months of 2004, the statistical office estimates that spending on assets such as factories and roads rose 31% from a year earlier.

The market had expected growth of closer to 20%.

The concern among some analysts is that the country's booming economy is still in danger of overheating.

"This figure will surely puzzle investors and even trigger questions on the effectiveness of the government's investment cooling measures," said Jun Ma, an economist at Deutsche Bank.

Put the brakes on

The government has implemented a number of measures aimed at cooling expansion and investment without bringing the economy to a juddering halt.

Banks have to hold more money in reserve and to provide fewer loans for projects, particularly in the property and automobile sectors.

There has also been a tightening of land-use rules to slow industrial developments.

Despite the jump in July's figures, many analysts are still optimistic about the outlook for the economy.

They point to the fact that investment figures are often unreliable, citing possible changes in accounting methods, as well as one-off factors such as the weather.