China investment beats forecasts

China is tipped to invest more internally as exports slow

China's capital investment has risen more than forecast in the first half of 2008, official figures showed.

Overall spending in fixed assets in cities, including roads and factories, rose 27.3% year-on-year to 7.22 trillion yuan ($1.05 trillion; £538bn).

Investment in property during the period was especially robust, up nearly 31% from a year earlier.

While the figures showed domestic investment remains strong, exports have cooled due to a wider global slowdown.

In the light of slowing exports, economists argue that China may well increase investments for state projects.

"Investment plays a very important role in expanding domestic demand and sustaining stable growth," said Wang Tongsan, a researcher at the Chinese Academy of Social Sciences.

Jing Ulrich, chairman of China equities at JP Morgan said the increase in investment in would probably "help alleviate concerns about the magnitude of China's economic slowdown".

But she added that higher prices probably exaggerated the National Bureau of Statistics figures.