BEIJING, Aug 18: Too much government revenue is being used for urban construction and other fixed-asset investments, making it difficult to rein in China's rapid economic growth, Xinhua news agency reported on Saturday, citing a government think-tank official.

Instead, local governments should focus more spending on education, healthcare and social security, said Wang Yiming, deputy director of the academy of macroeconomic research institute under the National Development and Reform Commission, the top planning agency.

Wang told a meeting of the China Economic Development Forum that cheap resources such as electricity, water and land were fanning rapid investment growth by private firms.

Annual growth in Chinese fixed-asset investment in urban areas slowed a touch to 26.6 percent in the first seven months of the year, but the overall level remained strong and many economists expect further tightening measures to slow the world's fastest growing major economy.

The proportion of government revenues to national income has risen from 21.1pc in 2001 to 24.2pc in 2006; that of enterprises rose from 15.1pc to 17.5pc; while that of residents dropped from 63.8 percent to 56.5pc, Xinhua reported.—Reuters