Investment by Chinese businesses surged in the first five months of the year according to new official figures - by thirty per cent compared with the same period in 2005. The figure is further evidence that China's economy might be growing too fast, and a central bank official has expressed some concerns. This report from Andrew Walker:

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The worry is that it might just be happening too fast. With very high levels of investment there is more risk that some projects might turn out to be unprofitable and lead to business failures, job losses and perhaps serious problems for the banks which have lent money to finance the investment.

A senior official in the Chinese central bank said they will, as he put it, "remove fuel from the fire", to reduce the risk. The idea is to constrain commercial banks' lending. Banks that lend too much may be required to buy low interest financial assets, reducing the amount they have available to lend to business.

The central bank has already raised interest rates, in April, in an effort to slow the investment boom. Many economists expect further increases. And over the last year or so, the Central Bank has allowed the Chinese currency the Yuan to rise. That makes Chinese exporters less competitive and so could help reduce business enthusiasm for new investment. So far however, there is little evidence of an impact.

Andrew Walker, BBC

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extent
the limits of something, scope

fuelled
caused

commercial premises
buildings or sites where goods are made

turn out to be unprofitable
result in not bringing money

lent
given for a period of time and expected to be paid back

to constrain
to limit

assets
property or business possessions that have value

boom
a period of sudden activity in commerce

competitive
offering low enough prices to compare well with rival traders

there is little evidence of an impact
no strong effect has been shown

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