China Investment December 2016

China

China: Investment growth hit multi-year low in 2016

January 20, 2017

In the full year 2016, urban fixed-asset investment (FAI), excluding rural households, expanded 8.1%. The print was below the 10.0% increase in 2015 and represented the weakest growth since 1999. 2016’s slowdown was the result of poor performances in all three sectors of the economy. The closely-watched real estate development indicator, however, expanded 6.9% in 2016, which was above the 1.0% rise in 2015.

Analyzing 2016’s data from the ownership side, investment growth among state-owned and state-holding units accelerated markedly from 10.9% in 2015 to 18.7%. Conversely, activity among private companies decelerated from a 10.1% increase in 2015 to a meagre 3.2% in 2016. This signals that the public sector continues to be the main source of investment growth at the expense of the private sector, thereby casting doubt on the quality of China’s economic transition.

A month-on-month comparison shows that investment in urban fixed assets rose a seasonally-adjusted 0.53% in December, slightly below the 0.57% increase in November. The reading was the weakest growth since February 2011.

FocusEconomics Consensus Forecast participants expect fixed-asset investment to grow 7.9% in 2017, which is down 0.3 percentage points from last month’s Consensus. In 2018, the panel sees fixed-asset investment growth at 7.8%.


Author: Ricard Torné, Head of Economic Research

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China Investment December 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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