China Investment August 2016


Investment stabilizes in August

In the first eight months of the year through to August, urban fixed-asset investment (FAI), excluding rural households, expanded 8.1% over the same period last year, which mirrored July’s result. The reading came in above the 7.9% rise the markets had expected. A month-on-month comparison shows that investment in urban fixed assets rose a seasonally-adjusted 0.58% in August, which was above the 0.50% increase recorded in July.

The steady pace of growth observed in August reflected that an acceleration in the primary and the tertiary sectors was offset by a deceleration in the secondary sector. The closely-watched real estate development indicator gained some steam in August and rebounded from July’s five-month low.

Analyzing August’s data from the ownership side, investment growth among state-owned and state-holding units moderated slightly, although it still expanded a robust 21.4%. Activity among private companies stabilized in August and expanded a mild 2.1%. This signals that the public sector continues to be the main source of investment growth at the expense of the private sector, thereby casting doubts about the quality of China’s economic transition.

FocusEconomics Consensus Forecast participants expect fixed-asset investment to grow 9.6% in 2016, which is down 0.1 percentage points from last month’s Consensus. In 2017, the panel sees fixed-asset investment growth at 9.0%.

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China Investment Chart

China Investment August 2016

Note: Month-on-month changes of seasonally adjusted urban fixed-asset investment index and annual growth rate (year-to-date) in %.
Source: National Bureau of Statistics of China (NBS).

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