China's urban fixed-asset investment (FAI) growth further picked up in May, providing an encouraging sign that domestic demand could help buffer the impact of shrinking foreign demand.

The nation's urban fixed-asset investment grew at an annualized rate of 32.9 percent in the first five months of the year, up from 30.5 percent in the first four months, the National Bureau of Statistics said yesterday. The bureau does not provide monthly breakdown.

"The growth is close to the record highs we saw in 2004," said Dong Xian'an, macroeconomic analyst with China Southwest Securities. "It is very strong, especially when you consider the price level is much lower now."