China's industrial-output growth slowed for a second month after cuts to export incentives.

Production rose 17.5 percent in August from a year earlier after gaining 18 percent in July, the National Bureau of Statistics said today. That was less than the 17.9 percent median estimate of 23 economists surveyed by Bloomberg News.

The slowdown may do little to ease government concern that the world's fastest-growing major economy risks overheating. Inflation jumped in August to the highest rate in a decade and property and stock prices have surged.

``Industrial production has responded to tightening measures,'' said Paul Tang, chief economist at Bank of East Asia Ltd. in Hong Kong. ``But the economy still risks overheating as inflation accelerates and asset bubbles get bigger.''

The People's Bank of China last week ordered lenders to set aside bigger reserves for the seventh time this year. It has also raised interest rates four times since March.

Wang Qian, an economist at JPMorgan Chase & Co. in Hong Kong, expects a 0.27 percentage point increase in the one-year lending rate to 7.29 percent by year's end. Wang also says the proportion of deposits that lenders must set aside as reserves may rise by 0.5 percentage point to 13 percent.

China's economy, the world's fourth largest, expanded 11.9 percent in the second quarter from a year earlier, the fastest pace in more than 12 years.

Cash From Exports

For the first eight months, industrial production rose 18.4 percent from a year earlier. That compares with the 16.6 percent gain for all of 2006.

Automobile output climbed 21.7 percent in August, slowing from a 32.7 percent increase in the previous month. Cement production rose 13.3 percent, after an 11.6 percent gain. Output of steel products increased 23.7 percent, close to the previous month's 23.9 percent growth.

Export earnings have flooded the economy with cash. China's trade surplus widened 33 percent in August from a year earlier to $24.97 billion.

Overseas shipments had their smallest gain in five months in August after the government reduced export tax rebates in July. Growth in lead production will slow this year because of tax changes and raw-material shortages, the China Nonferrous Metals Industry Association said this week.

China's consumer prices rose 6.5 percent in August from a year earlier, the biggest increase since December 1996, on food costs. The key CSI 300 Index of stocks has almost quadrupled in the past year and housing prices in 70 Chinese cities jumped 8.2 percent last month from a year earlier.

Tomorrow's urban fixed-asset investment data will be the nation's final major economic indicator this month. The median estimate of economists surveyed by Bloomberg News is for a 26.5 percent increase in factory and property spending through August from a year earlier.

That would be close to the 26.6 percent pace of the first seven months.