Chinese investment surged even higher in the first five months of this year, suggesting the government is failing to cool its rampant economy.
Despite massive building work, officials now fear oversupply
China said spending on fixed assets like buildings and machinery rose 30.3% in the first five months of 2006, compared to the previous year.
The government wants to cut investment by asking banks to curb their lending.
It is worried that too much investment will create industrial overcapacity, threatening profits and employment.
"The risks to the economy are from the investment boom turning to bust and what the government wants to do is make sure it's a steady process," said Julian Jessop, chief international economist at Capital Economics.
"The best way to avoid a hard landing in 2007 or 2008 is to start deflating that investment bubble now."
Cooling the economy
China's National Bureau of Statistics said fixed asset investment in towns and cities rose to 2.54 trillion yuan ($318bn; £172bn) between January and May.
Premier Wen Jiabao has told local government leaders and bankers to tighten their lending and land use controls, while the central bank has made a similar plea to commercial banks.
China has the world's fastest growing major economy, which expanded at an annual rate of 10.3% in the first quarter of 2006.
Recent data has suggested that slowing the pace of growth will be difficult.
China's trade surplus widened to a record $13bn in May and there were big increases in industrial output, retail sales and money supply during the same month.