China fixed-asset investment growth hits near 15-year low in May
China’s fixed-asset investment grew at its slowest rate in nearly 15 years in May, missing expectations even as growth in retail sales and factory output steadied, arguing for Beijing to increase policy support to avert a deeper downturn.
Fixed-asset investment, a crucial driver of the world’s second-largest economy, rose 11.4 percent in the first five months of this year from the year-earlier period, missing a Reuters poll forecast for a 12 percent gain, the same as in April.
Some analysts said China’s housing cooldown had crimped new investment as falling home prices dampened the mood of consumers, leading them to tighten their belts.
“The data showed the economic situation remains grim,” said Li Huiyong, economist at Shenyin Wanguo Securities in Shanghai.
“Investment is vital for stabilizing growth in the short term and the poor performance of investment is putting pressure on the economy. We previously expected second-quarter economic growth to be 7 percent, we now expect growth to slow to 6.8 percent.
Factory output grew 6.1 percent last month compared with the year-ago period, the National Bureau of Statistics said on Thursday, slightly higher than analyst forecasts for a 6 percent rise and 5.9 percent in April.
Retail sales grew 10.1 percent in May from the same time last year, in line with forecasts for 10.1 percent growth and compared with 10.0 percent in April.
The disappointing investment data followed figures earlier this week that showed China’s import growth had slumped more than expected last month. Persistent weakness in the economy will strengthen calls that policymakers must do more sooner rather than later to revive growth.
Mindful that China’s economy remains vulnerable to a further slowdown, Beijing tried to harness as much fiscal support as possible this week by threatening to cut the budgets of local governments if they don’t spend most of their allocated cash.
