China warns investment may weaken further

China’s investment growth, already at record lows, may weaken even further in the future and authorities should step up fiscal and financial measures to give it a boost, the state planner said on Monday.

Beijing is urging more infrastructure spending as the economy faces both domestic and external risks, such as US tariffs. But the benefits will take time to kick in, with analysts expecting the economy to get worse before it gets better.

Fixed-asset investment (FAI) in the first seven months of the year grew at the slowest pace on record since early 1996, after a long crackdown on illegal local government borrowing to finance vanity projects.

Moreover, initial investment approvals — an indicator of future activity — have dropped off sharply, the National Development and Reform Commission (NDRC) said in a statement.

“The decline reflects the many barriers that our country’s infrastructure construction faces, and the stiff competition in low-end manufacturing while middleand high-end sectors have relatively high bar for entry,” NDRC said in a monthly monitoring report published on its website. Among these newly registered projects, the investment value of infrastructure

projects fell 35.2 per cent in January-July from a year earlier, with the most significant drop in sectors such as pipelines, railways and air and road transport. Growth in registered manufacturing investments slowed to 12.4 per cent.

The slowdown is partly due to Beijing’s stringent debt curbs and efforts to reduce financial risks, the NDRC said.

New manufacturing investment projects in sectors ranging from tobacco and fur to petroleum and nuclear fuel processing all fell more than 30 per cent. In recent weeks, Beijing has told local governments to speed up the sale of special bonds to raise money for investments.