Shanghai --

The Chinese government is investigating a downturn in the auto industry, state media report, citing worries about soaring production and slowing sales. China is on track to become the world's third-largest auto making country after the United States and Japan, with output forecast to top five million units this year, but sales have been slowing. Statistics from the China Association of Automobile Manufacturers show sedan sales grew 32 per cent in the first half of this year over the same period a year earlier, a significant slowing from the 75-per-cent sales growth for all of 2003. Sales totalled 346,000 units in July, down 9 per cent from June and the fourth straight month of month-to-month declines. Policy makers have identified the auto industry as one of several sectors facing over-investment, as such foreign auto makers as General Motors Corp., Ford Motor Co. and Volkswagen AG pour billions of dollars into new factories and ventures in the world's most populous country. AP