REUTERS in Beijing

Fixed-asset investment rose 26.4 per cent year on year on the mainland last month, with analysts saying Beijing still needs to keep a tight grip on credit.

Reining in fixed-asset investment - spending on roads, buildings and other infrastructure - has been a top priority for policymakers trying to ensure the stability of the world's seventh-largest economy.

Last month's growth rate was less than September's, but economists said the fall was not marked enough to take the pressure off Beijing.

"I think if you compare the fixed-asset investment growth with the numbers earlier this year there's certainly been a distinct slowdown, but when you look at the growth rate for October - 26 per cent - it's still a very strong number," said Rob Subbaraman, an economist with Lehman Brothers in Tokyo.

"I think this suggests that China needs to stay the course and keep its tighter policies in place. The main message from this data is it's too early to relax the tighter policies."

Yesterday's report by the National Bureau of Statistics said growth in the first 10 months of the year was down 1.5 percentage points from September's level. Authorities had not previously released a number for September alone. Investment in the first 10 months was 29.5 per cent higher than a year earlier.

Last month's fixed-asset investment figures added to evidence that the mainland economy, an increasingly important driver of global growth, is slowing slightly.

The central bank said economic cooling measures were at a crucial stage and that it was keeping a close eye on inflation and investment data.

Since last year, mainland authorities have implemented a variety of measures to rein in investment in industries such as property, steel and cement.

In the most drastic move yet, the central bank last month raised interest rates by 0.27 of a percentage point, the first rise in nine years. The one-year lending rate rose to 5.58 per cent and the one-year deposit rate to 2.25 per cent.

Analysts said time was needed to see whether another rate increase was actually going to be in the offing.

"I don't think there will be an immediate rate hike but investment is still too high and the central bank will be prepared for another rate hike and other administrative controls in the future if it doesn't slow," said Qu Hongbin , HSBC China economist in Hong Kong.

Song Guoqing , an economist with China's Stock Exchange Executive Council, said October's investment figure was in line with his expectations, but still too high for comfort.

"Personally, I believe the figure is high enough to move the interest rate up. Of course, we still need to watch the figures over the next two months before we make a conclusion."