International
China raises key interest rate to 7.29%; Spending on factories, equipment and property climbed 26.7% in the first 8 months of 2007
By Finfacts Team
Sep 14, 2007, 11:58

Shanghai World Financial Center, built by Japan's Mori Group, is a 101 story mixed-use vertical city strategically located in the heart of Pudong’s Lujiazui district, an area that has emerged as China’s commercial and financial capital. Within the district’s modern urban infrastructure you will find the Shanghai Stock and Futures Exchanges, the offices of first-tier Chinese and multinational companies, and five-star hotels all just minutes away from luxury apartments, numerous shopping centers, and a European style riverside promenade that offers picturesque night-views of the Bund. China Daily says that the Chinese mainland's tallest building is setting an altitude record for pre-completion rents.  Shanghai World Financial Center managers are asking future tenants to pay between $1.70 and $1.96 U.S. dollars per square meter per day for space in the tower.  The high end of the range is 40 percent more than Shanghai's previous record, which was set months ago by Park Place, an upscale development in downtown Jing'an Temple area. Rents there averaged $1.40 dollars per square meter per day.

China today raised interest rates for the fifth time since March to dampen the highest inflation since 1996 and reduce speculation in stocks and property.

The People's Bank of China announced that benchmark one-year lending rate will increase to a nine-year high of 7.29 percent from 7.02 percent, starting Saturday. The one-year deposit rate will rise to 3.87 percent from 3.6 percent.

China's State news agency Xinhua reported  earlier Friday that investment in fixed assets in China's economy rose 26.7 percent year-on-year in the first eight months, according to data published by the National Bureau of Statistics (NBS).

The latest figure was slightly higher than the 26.6 percent for the first seven months.

Urban fixed asset investment added up to 6.67 trillion yuan (886.97 billion U.S. dollars) in the first eight months, the bureau said.

Investment in the primary industry enjoyed a 42.9-percent growth to 78.3 billion yuan and that of the secondary industry rose 29.5 percent to 2.96 trillion yuan. The tertiary industry witnessed an increase of 24.3 percent to 3.63 trillion yuan.

Investment in the property sector registered a 29-percent year-on-year growth in the period, hitting 1.43 trillion yuan (190.2 billion U.S. dollars).

A total of 149,751 new projects were launched during the first eight months, 18,665 more than a year earlier. The planned investment for these projects totaled 5.19 trillion yuan (690.2 billion U.S. dollars), up 16.7 percent year on year.

China's fixed asset investment maintained a relatively stable level in the first four months, but it began to pick up in May, with the January-May figure up 25.9 percent, compared with 25.5 percent in the first four months and 24 percent for entire 2006.

For the first half of this year, the figure was 26.7 percent. Figures for August alone were not provided.

The NBS this week released a series of figures that provide a general picture of China's economy.

Chinese retail sales in August rose 17.1 percent year-on-year to reach 711.7 billion yuan (94.6 billion U.S. dollars), up from 16.4 percent in the previous month.

Another major economic barometer - the consumer price index (CPI)- went up by 6.5 percent in August, the highest monthly rise in 11 years, on food price hikes compared with the same period of last year.

China's industrial output rose 17.5 percent in August, down from 18 percent in July and 19.4 percent in June.

A central bank report published before the release of these figures warned that China's economy remains on the brink of overheating.

The World Bank on Wednesday raised its forecast for China's 2007 economic growth to 11.3 percent from an earlier 10.4 percent and said the country's macroeconomic prospects were still good.

Chinese Premier Wen Jiabao said in a speech at the Summer Davos forum that the government should "give top priority to macro-regulation to prevent an already fast growing economy from becoming overheated".

Xinhua says that the government has taken various measures to ease liquidity and prevent the economy from overheating, such as the planned issuance of 1.55-trillion-yuan special treasury bonds.

The People's Bank of China has raised raised its benchmark one-year interest rater five times this year, and raised the reserve requirement ratio for the seventh time last Thursday to curb excess liquidity.

The central bank also reduced the tax on deposit interest income from 20 percent to 5percent from Aug. 15, a measure aimed to make bank accounts more attractive.

Fan Jianping, forecasting department chief at a unit of the National Development and Reform Commission, said earlier that China's economy may expand slightly slower in the second half of 2007 than the first half.

He said the country's gross domestic product (GDP) would likely grow by 11.3 percent this year.

China's GDP expanded 11.9 percent in the second quarter of this year, lifting first-half growth to 11.5 percent.