China’s property investment slows pace

From a year earlier industrial production increased by 6.0%, below expectations for growth of 6.6%.

Average daily output stood at 2.124 million tonnes, down 7.6 percent from June, its lowest since November 2014, according to Reuters calculations based on data from the National Bureau of Statistics (NBS).

“The data misses reflect the impact of the recent equity market crash, which reduced consumer spending power and diverted bank lending away from the real economy and into the government-orchestrated equity buying”, explained Dariusz Kowalczyk, senior economist and strategist at Credit Agricole.

Fixed-asset investment in nonrural areas of China rose 11.2 per cent in the January-July period compared with the same period a year earlier. Economists had expected a 11.5 per cent rise, edging up from June.

Wang Baobin, an NBS statistician, said the investment growth remained stable and the structure continued to improve.

The property investment news is a bad omen for China’s economic growth, which has stalled as weak overseas demand cut into exports and industrial production.

One bright spot was a solid upturn in housing sales for the first seven months, which rose 16.8 per cent year-over-year after a 12.9 per cent gain in the first half, though property investment and housing starts showed more weakness. Real estate investment, which directly affects about 40 other business sectors in China, is considered to be a crucial growth driver.

The rise was slower than the 11.4% increase recorded in the January-to-June period. This adds signals at a sluggish economy in the second-largest economy of the world.

Weak property investment is expected to continue this year as a huge overhang of unsold houses deters developers from starting new construction, analysts said.