Nov. 15 (Bloomberg) -- China's factory and property spending may have climbed 26.2 percent in the first 10 months of this year, underscoring government concern that the world's fastest-growing major economy is at risk of overheating.

The increase in urban fixed-asset investment will be close to the 26.4 percent pace through September, according to the median estimate of 21 economists in a Bloomberg News survey. The statistics bureau releases the figure at 10 a.m. tomorrow.

A record $27 billion trade surplus in October injected cash into the economy, fueling investment, decade-high inflation and asset-price gains. The People's Bank of China will ``moderately'' boost efforts to cool the economy after three quarters of growth of more than 11 percent, according to a statement by Governor Zhou Xiaochuan in state media yesterday.

``The problem China has is too much money,'' said Shen Minggao, an economist at Citigroup Inc. in Beijing. ``The central bank will raise interest rates at least once more this year to curb fast growth in loans and investment.''

The economists' estimate compares with 26.8 percent growth a year earlier and the 24.5 percent expansion in all of 2006. Excessive spending on factories raises the risk of overcapacity, idle factories, sinking profits and bad loans in a slowdown.

More than two-thirds of Chinese enterprises believe their industries have too much capacity, the state-run Xinhua News Agency reported Nov. 11, citing a government survey. Textile, pharmaceutical and equipment manufacturing were cited as examples.

Wen's Pledge

Premier Wen Jiabao last month pledged to limit land use, tighten investment-project approvals and guide bank lending to prevent overheating.

China's money supply grew 18.5 percent in October from a year earlier, exceeding the central bank's annual target of 16 percent for a ninth straight month.

The People's Bank of China last week ordered lenders to set aside bigger reserves for the ninth time this year. The ratio, 13.5 percent of deposits, will be the highest since at least 1987.

It has also sold bills to drain cash from the financial system and raised the key one-year lending rate to 7.29 percent, the highest since 1998.

Retained earnings and money raised in buoyant stock markets help to fund investment. Profits at government-owned companies surged 31.2 percent in the third quarter from a year earlier.

Accelerating inflation has lowered real borrowing costs for companies. Consumer prices rose 6.5 percent in October from a year earlier, matching August's increase, which was the fastest in more than a decade.

$470 Billion of New Loans

Outstanding local-currency loans rose 17.7 percent, accelerating for a fourth consecutive month. Banks extended 3.5 trillion yuan ($470 billion) of new loans in the first 10 months of this year.

China Overseas Land & Investment Ltd. and China State Construction International Ltd. are among those investing, announcing plans to borrow to develop properties in the cities of Zhuhai and Chongqing.

Housing prices in China's 70 major cities jumped 9.5 percent in October from a year earlier, the biggest gain since records began in August 2005.

Industrial production rose 17.9 percent in October from a year earlier after jumping 18.9 percent in September, the statistics bureau said today.

The following table shows economists' estimates for percentage changes in China's urban fixed-asset investment in the first 10 months of 2007 from a year earlier, followed by October's increase in industrial production.

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                       Fixed-Asset  Industrial
                        Investment  Production
--------------------------------------------
Median                        26.2%    18.5%
Average                       26.3%    18.6%
High                          27.0%    21.8%
Low                           26.0%    16.8%
Number of Estimates              21       22
--------------------------------------------
Action Economics              26.5%    19.5%
ANZ Banking Group             27.0%    18.5%
Bank of China (Hong Kong)     26.6%    19.2%
Capital Economics             26.1%    18.6%
CIMB-GK Research              26.0%    17.7%
Citic Securities              26.2%    18.0%
Daiwa Institute of Research   26.2%    18.5%
Deutsche Bank                 27.0%    19.0%
Forecast                      26.2%    19.0%
Goldman Sachs                    --    19.4%
Hang Seng Bank                26.1%    16.8%
High Frequency Economics      26.4%    21.8%
HSBC                          26.0%    18.5%
Industrial Bank               26.0%    18.4%
ING Groep                     26.5%    18.0%
JPMorgan Chase                26.1%    18.5%
Mitsubishi UFJ Securities     26.0%    17.4%
Natixis                       26.5%    18.1%
Royal Bank of Scotland        26.3%    18.8%
Shenyin Wanguo Securities     26.2%    18.0%
Standard Chartered Bank       26.6%    19.4%
Thomson IFR                   26.3%    18.5%
--------------------------------------------

To contact the reporter on this story: Nipa Piboontanasawat in Hong Kong at npiboontanas@bloomberg.net

Last Updated: November 14, 2007 22:01 EST