China: Investment inches up in September
October 19, 2016
In the first nine months of the year through to September, urban fixed-asset investment (FAI), excluding rural households, expanded 8.2% from the same period last year, which was above the 8.1% expansion in August. The reading was in line with the result that markets had expected. A month-on-month comparison shows that investment in urban fixed assets rose a seasonally-adjusted 0.52% in September, which was below the 0.58% increase in August.
The mild improvement observed in September reflected an acceleration in the primary and the secondary sectors. Conversely, growth in the tertiary sector decelerated slightly in the same month. The closely-watched real estate development indicator gained steam in September and hit a three-month high. This suggests that developers have sped up their investment projects to anticipate the expected tightening measures implemented in some cities at the start of October.
Analyzing September’s data from the ownership side, investment growth among state-owned and state-holding units moderated slightly, although it still expanded a robust 21.1%. Activity among private companies accelerated in September and expanded a mild 2.5%. Despite the improvement, the strong growth in investment among government-related industries 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.