The Dragon Trumped? Investment Growth In China Slows Following Trade War With US

Numbers released from China’s National Bureau of Statistics revealed a slowdown in Chinese investment to record lows. The fixed asset investment numbers which are a key driver of the Chinese economy expanded by only 5.3 per cent in the period from January to August which is a record low.

China has in recent years been trying to reorient its economy away from relying on investment and exports to power economic growth. However, the trade spat with the United States and the threat of further tariffs has complicated Chinese economic management.

The Chinese cabinet has indicated that infrastructure project approval rates would quicken in the coming years as they look to support a flagging economy. However, experts believe that these measures by the Chinese establishment would take effect only from next year. Factory output growth clocked a growth a 6.1 per cent growth in August which is just marginally higher than the 6.0 per cent growth recorded in July.

Retail sales registered a growth of 9.0 per cent beating estimates which projected a growth of 8.8 per cent. This sector is important as the Chinese economic policymakers are looking at driving economic growth through a growth in personal consumption. However, experts have warned against undue optimism on this front as some of the growth in this sector could be possibly due to higher inflation.