Sept. 5 (Bloomberg) -- China’s property investment growth may rebound to around 30 percent next year and support the nation’s economic recovery, central bank adviser Fan Gang said.

“As property developers rush to buy land and plan construction this year, investment activities will soon pick up pace,” Fan told the China CEO Forum in Beijing today. Fan is the academic member of the monetary policy committee at the People’s Bank of China.

China’s property sales surged 60 percent by value in the first seven months and home prices in 70 major cities rose the most in 9 months in July from a year earlier as Premier Wen Jiabao’s $585 billion stimulus and an explosion of lending spur home construction and purchases. Still, the 11.6 percent expansion of property investment in the first seven months was one-third the pace in 2007, before a housing slump started.

“A rebound in real estate investment will be the next engine supporting economic recovery after the government-led infrastructure construction plays a dominant role stimulating growth this year,” Lu Zhengwei, an economist at Industrial Bank Co., said by phone in Shanghai. “Growth of 20 percent to 25 percent in real estate investment is healthy, whereas a 30 percent pace may trigger concern about overheating in the property sector.”

Property investment accounts for a third of overall fixed- asset spending by the world’s third-largest economy.

Separately, Fan said the government’s recent “fine- tuning” of monetary policy is “no surprise” because the central bank has to prevent excessive liquidity, and that the decline of the stock market on concerns that loan growth will slow is “a very good sign”.

Bank lending in China fell in July to less than a quarter of June’s level, and concerns among investors that the government may start to rein in loan growth drove benchmark stock index into a bear market this week.

China’s investors “have finally learned to respond to risks rather than believing that the market will rise forever, which is a very good sign,” Fan said.

The global economy has escaped a repeat of the Great Depression, and yet may remain weak for another one or two years, Fan said. “A world economic recovery will be a prolonged process,” he said.

China’s exports, which have dropped for the past nine months, may return to growth in the last quarter of this year as global demand recovers, Fan said, without giving a specific forecast.

--Li Yanping. Editors: Alex Devine, Mike Millard.

To contact Bloomberg News staff for this story: Li Yanping in Beijing at +86-10-6649-7568 or yli16@bloomberg.net

Last Updated: September 5, 2009 03:38 EDT