Business Economy 14 Jun 2016 Chinese investment p ...

Chinese investment plunges to 16-year-low

REUTERS | DECCAN CHRONICLE
Published Jun 14, 2016, 1:15 am IST
Updated Jun 14, 2016, 1:15 am IST
The moderation comes after a record credit binge in the first quarter of the year, a splurge aimed at stimulating China’s slowing economy.
 The moderation comes after a record credit binge in the first quarter of the year, a splurge aimed at stimulating China’s slowing economy.

Beijing: China’s fixed asset investment, an important gauge of infrastructure spending, slowed to its weakest pace in 16 years, government statistics showed on Monday, a worrying trend despite other signs of economic stabilisation in the Asian giant.

The moderation comes after a record credit binge in the first quarter of the year, a splurge aimed at stimulating China’s slowing economy. Fixed asset investment rose 9.6 per cent in the first five months of the year, according to the National Bureau of Statistics.

The world’s number two economy, a key driver of global expansion, grew just 6.9 per cent in 2015, the weakest rate in a quarter of a century. The investment results fell far short of economists’ median forecast of 10.4 per cent in a survey by Bloomberg News and was the slowest pace of expansion since May 2000.

But factory production and consumer spending showed steady growth for the period, the government data indicated, as industrial output rose six per cent year-on-year in May, matching the figure for April, while retail sales were up 10 per cent.

“The national economy extended a stabilising and progressing trend that emerged since the start of the year with positive factors accumulating,” said Sheng Laiyun, spokesman for the National Bureau of Statistics. “But we must be aware that the international environment remains complicated and severe, the painful domestic structural adjustments continue, and the economy is still under downward pressure.”

The data show that overall industrial conditions were broadly stable, Julian Evans-Pritchard of Capital Economics said in a note, but added that growth was “increasingly reliant on rapid state sector investment” that is likely to drop off later this year.

Private investment growth also weakened, with a 3.9 per cent increase in the first five months of the year. “The slowdown in private investment growth indeed showed the intrinsic driver of China’s economic growth is yet to be strengthened,” said Mr Sheng.

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