The mainland faces the risk of a rebound in fixed-asset investment as local governments continue to push spending on pet projects, said the chief of the country's top economic planning agency. Ma Kai , chairman of the National Development and Reform Commission, also said three economic 'excesses' were adding pressure for the yuan's further appreciation: growth in fixed-asset investment, in credit, and in trade surpluses. He said it would be hard to solve the problems in the short term as they were intertwined. 'The risk of an investment rebound and economic fluctuation remains,' Mr Ma wrote in an article published by a magazine run by the Communist Party's Publicity Department. From 28.2 per cent in September, growth in fixed-asset investment was 23.4 per cent in February, far exceeding the government's target of 18 per cent for the year. The government has been trying to mop up excessive liquidity as large inflows of funds - on the back of a soaring trade surplus, foreign direct investment, and hot money betting on the yuan's appreciation - contribute to overly fast growth in credit and fixed-asset investments. In the past year, the central bank has tightened monetary policy several times, including increases in banks' reserve requirements and lending rates, as well as open-market strategies. However, recent data suggested the government had failed to rein in the economy. In the first two months of the year, bank lending jumped 36 per cent to 981.4 billion yuan, or nearly one-third of the total for last year. The broad M2 money supply measure rose 18 per cent in February from a year earlier, faster than the official 16 per cent growth target. 'If the three main problems plaguing the economy are allowed to continue, overcapacity in China could sharply increase again,' Mr Ma said in the article, which was republished by Xinhua yesterday. He said the government should work to encourage private consumption and discourage capital spending. It should also contain fixed-asset investment and credit growth at a 'reasonable' level. Mr Ma said the large trade surplus remained a problem for economic growth, having risen 74 per cent to US$177.46 billion last year. 'China's trade surplus totalled US$39.61 in the first two months, which shows a tendency to expand further,' Mr Ma said, adding that China's external payments imbalance would place upward pressure on the yuan. 'If the problems persist ... China will face a higher external payments imbalance, along with more trade disputes, which will add pressure on the yuan to appreciate further,' he said. China's trade surplus rose almost tenfold to US$23.76 billion in February - the second-highest monthly figure on record - after exports surged 51.7 per cent. The soaring trade surplus has become a source of friction with western trading partners - the US in particular - whose politicians have accused Beijing of keeping its currency artificially low to give its exporters an advantage.