Fixed investment subdues Chinese economic growth

Figures released by China's National Bureau of Statistics suggest lower economic growth in August. Real growth in retail sales fell to 9 % y-o-y, while industrial output growth decelerated to 6 %. The sharpest slowdown was registered for fixed asset investment (FAI), which, even with cautious inflation estimates, contracted in real terms in August. Private investment growth, in particular, was sluggish, while also public investment barely topped 1 %.

Looking at core sectors of the economy, on-year contractions in real investment in the industrial and construction sectors have been registered every month this year. The sharpest drop has been in investment in extractive industries. Investment in the service sector, in contrast, continued to rise, but growth has slowed significantly and investment in retail and wholesale has been shrinking. Some observers believe the weak investment trend may reflect company efforts to reduce debt. People's Bank of China figures, however, show that indebtedness continues to soar.

Key real economy indicators for China, %

Sources: NBS and BOFIT.