"But such a modest interest rate hike is not enough to force down the property prices," she said. "Further interest rate increases are likely to be already on the way."

Capital Destination

China has become a hotspot for investors from all over the world.

Foreign direct investment (FDI) inflows grew 6.14 percent in September year on year to reach $8.384 billion, compared with $7.602 billion in August, said the Ministry of Commerce (MOFCOM). This represents the ninth consecutive month of growth since August 2009.

The September figure brought the amount for the first three quarters to $74.34 billion, soaring 16.6 percent from a year earlier. The manufacturing industry has been the favorite destination, absorbing 47.6 percent of the total, followed by 45 percent for the service sector.

From January to September, the country approved 19,209 foreign-funded companies, surging 17.5 percent from one year ago.

With the broader economy picking up momentum, FDI of the country has recovered to pre-crisis levels, said Yao Jian, spokesman of the MOFCOM.

Besides this, the investment structure has continued to improve, he said. For example, the relatively underdeveloped western areas experienced a 48.8-percent surge in FDI in the first three quarters, 32.22 percentage points higher than the national average.

Taking to the Air

After a year of flying low, China's aviation industry is getting back on the track of fast growth.

The industry generated 7.36 billion yuan ($1.1 billion) in profits in September, compared with only 460 million yuan ($69 million) for the same period last year, said the Civil Aviation Administration of China (CAAC). Of this total, domestic airlines earned 6.64 billion yuan ($1 billion), and airports raked in 290 million yuan ($43.5 million).

The market turnaround stems from a significant surge in air traffic. In September, passenger volume expanded 17 percent year on year to 22.6 million, and cargo volume grew 9.1 percent from one year ago to reach 515,700 tons.

The industry has gained strength from a tourism boom, as well as thriving foreign trade, said Mao Ang, a transport analyst at the China Galaxy Securities Co. Ltd.

To lift the aviation industry, the government has also announced in May to waive business taxes on airlines' international routes to help them explore overseas markets.

The big carriers, in particular, will gather steam as the August plane crash in Yichun, Heilongjiang Province, hurt customer confidence for smaller rivals, said Huang Jinxiang, an analyst at the Bohai Securities Co. Ltd.

Adding U.S. Securities

China increased its holdings of U.S. Treasury securities by $21.7 billion in August to $846.7 billion, retaining its position as the largest foreign holder of U.S. government debt, said the U.S. Department of Treasury. The country resumed net purchases in July after two consecutive months of net sales.

Japan, the second largest foreign holder, also remained a net buyer in August, boosting its portfolio to $836.6 billion from $821 billion the previous month. Total holdings of Treasury securities by all foreign countries were $2.28 trillion, an increase of 1.4 percent from July.

Analysts believe the U.S. government bonds remain a safe haven for investors as uncertainties hang over the prospect of the world economy. Recovery of the U.S. economy and the European debt woes also beefed up flow of foreign investments into the United States, they said.

The August purchase also helped soothe worries that Washington's largest creditor was moving away from dollar assets. On October 15, the U.S. Government reported that the federal budget deficit totaled $1.3 trillion for the 2010 budget year, which ended on September 30, down $122 billion from the record $1.4 trillion deficit set in 2009.