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China Investment July 2021

China: Nominal fixed investment records slowest expansion since December 2020 in July

Nominal urban fixed asset investment expanded 10.3% in year-to-date terms in July (June: +12.6%). July’s outturn marked the worst reading since December 2020, and was below market expectations. July’s notable weakening was largely driven by a deterioration in the tertiary sector, which grew at the slowest pace since December 2020. In addition, the secondary sector lost steam.

On a monthly basis, nominal urban fixed asset investment grew 0.2% in seasonally-adjusted terms in July, which was below June’s 0.3% expansion.

Looking ahead, fixed-asset investment in H2 should be powered by high-tech manufacturing investment, thanks to government support for the sector under the dual-circulation strategy. At the same time, property investment will likely be weighed on by the authorities’ efforts to avoid asset bubbles and the build-up of financial risk in the housing market.

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