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Fast Comment ChinaNo boost to infrastructure yet

  1. Mixed activity data – fixed investment growth still weak
  2. We see growth slowing further
Mixed activity data – fixed investment growth still weak
August activity data was a mixed bag, but the fixed investments data remain weak. Growth of fixed investments fell to 5.3 percent year-to-date y-o-y from 5.5 percent in July against the consensus expectations of an increase. According to our calculations, that corresponds to a modest increase in the ordinary growth rate from 3.0 percent y-o-y to 4.1 percent (see first chart). It is primarily infrastructure investments that suffer with the growth rate remaining in negative territory in August (see second chart). Thus, there are still no signs of the authorities’ stimuli kicking in yet, even though funding conditions for local governments have been eased markedly to promote infrastructure projects. Property construction investments growth also fell, which is consistent with that the authorities still seem to be in tightening mode with respect to the property market. The two other main activity indicators, retail sales and industrial production, both experienced very slight growth increases.
We see growth slowing further
We still see overall growth slowing further, as the past deleveraging efforts and trade tensions are having a negative impact. However, the authorities have already reacted to the weakness and reversed course on economic policies, with monetary and fiscal policy now being loosened rather than tightened. Thus, growth should, in our view, stabilise late this year.



Bjarke Roed-Frederiksen

Senior Economist

Latin America and China

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