China: Nominal fixed investment declines at the weakest pace in 7-months in January–July
Nominal urban fixed asset investment declined 1.6% in the first seven months of the year (January–June: -3.1% year-on-year). The figure marked the smallest drop since December 2019 and was in line with the result that market analysts had expected.
The improvement was broad-based, with growth in the primary sector accelerating, the decline in the secondary sector softening and the tertiary sector posting a healthy rebound. In terms of ownership, investment in fixed assets of state-owned enterprises accelerated in the January–July period, while investment among private companies continued to decline albeit at a softer pace.
On a monthly basis, rose 4.85% in seasonally-adjusted terms in July, which was below June’s 5.06% expansion.
The January–July reading suggests that investment activities are recovering. In this regard, Yi David Wang, head of China economics at Credit Suisse, adds that:
“FAI growth continues to accelerate in year-on-year space, with real estate and infrastructure already showing growth rates higher than pre-outbreak levels, consistent with policy implications. Yet the recovery remains uneven as manufacturing FAI continues to lag behind in contraction territory, reflecting limitations of recent stimulus and its varying impacts on different sectors due to credit allocation challenges.”