China capital spending slows as economy softens
China’s capital spending was slightly lower than expected in October, consistent with weakness in a batch of data this week as Beijing battles to keep the world’s fourth-largest economy from slowing too sharply.
Investment in urban areas in fixed assets such as roads and factories rose 27.2 percent in the first 10 months of the year compared with the same period in 2007, down from 27.6 percent in the first three quarters, the National Bureau of Statistics said on Friday.
The rise was slightly below expectations, which centred on an increase of 27.5 percent.
Public works will receive a boost from the government’s new 4 trillion yuan ($586 billion) stimulus plan, but the jury is out on whether it will be enough to fill the gap left by a downturn in the property market and factory production, which together account for more than half of capital investment.
“Next year we’ll see a major deceleration of fixed-asset investment,” said Jun Ma, chief economist for greater China with Deutsche Bank in Hong Kong.
“The government stimulus can offset part of the deceleration of developers and manufacturers, but it’s unable to fully offset it,” he said.
The government did not publish a figure for fixed-asset investment growth for October alone, but Goldman Sachs estimated it rose 24.1 percent over a year earlier, the slowest of any month this year.
The investment data followed a slew of indicators this week that pointed southward for the Chinese economy.
Industrial output fizzled to its weakest pace in seven years, rising 8.2 percent in October from a year earlier. Import growth slowed and inflation fell to a 17-month low as domestic demand cooled. Sales of retail goods, from furniture to cosmetics, also deteriorated.
China faces a major challenge to keep its economy on track, Mu Hong, vice chairman of the National Development and Reform Commission, the country’s top planning body, said on Friday.
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