Investment--no brakes on this car

Everybody wants to get a piece of China--whether a factory, shopping mall, condo, or villa--and the country's investment continues to soar. China National Bureau of Statistics released figures for January-April showing urban investment surged 25.7 percent from the same period last year. This makes four straight years of 25-30 percent investment growth (that's following a phenomenal 45 percent growth in 2004). The amount of investment has doubled since 2005. Investment has been an unusually high 40-plus percent of GDP. Even with GDP growing 15 percent in nominal terms, this 25.7 percent rate of growth in investment suggests an rising share of investment in GDP. Will China ever run out of things to build?

Manufacturing accounts for just under a third of investment and it increased by 31 percent this year. Two big-ticket items--electric power and road building, accounting for a combined 10.5 percent of investment--were up by just 4 percent this year. But the biggest chunk of investment--real estate which accounts for 27 percent of investment--was up 34 percent. Furniture manufacturing investment was up 49 percent--watch out U.S. furniture factories if there are any of you left--but textile and apparel investment grew less than 20 percent.

China has a history of boom-bust cycles. The last bust in the late 1990s left a lot of unfinished hulks on the skylines of Chinese cities. The current boom has gone on for an unsually long time and has been incredibly vigorous. Is China different now? Has it gotten over the hump and become a world-beating economy? Or will this be the next bubble to pop? Who knows?

China Urban Investment Jan-April 2008 (increase from year-earlier period)

Sector	Increase	Share of investment
Total	25.7
Agriculture, forestry, fisheries	71.6	1.1
Mining	32.1	3.7
Manufacturing	31.2	32.4
Ag processing	18.4	1.2
Food processing	26.1	0.8
Beverages	27.0	0.6
Tobacco	-11.3	0.1
Textiles	13.4	1.4
Apparel, shoes, hats	19.7	0.7
Leather, furs, feathers	40.8	0.3
Utilities	7.3	7.2
Transportation, freight	18.5	1.8
Real estate	33.9	27.5
Public investments	27.2	7.4
Note: Not a complete list Source: China National Bureau of Statistics.