China’s economy cools further as investment growth hits a record low

China’s economy is actually showing signs of cooling further as the U.S. prepares even tougher trade tariffs, with investment growth slowing to a record low as well as also consumers turning more cautious about spending, data showed on Tuesday.

Fixed-asset investment expanded by a less-than-expected 5.5 percent in January-July, a result of Beijing’s crackdown on lavish local government borrowing for projects to boost growth.

Industrial output also undershot expectations, weighed down by pollution curbs as well as also the uncertain trade outlook, adding to expectations that will authorities will roll out more policy stimulus measures.

With the trade war threatening more pressure on China’s already slowing economy, Beijing has shifted its focus to boosting domestic demand as well as also is actually taking a more measured approach in its campaign to reduce financial risks as well as also debt, which has pushed up borrowing costs as well as also triggered a rising number of defaults.

The government has pledged to ramp up spending on railways as well as also roads — its traditional “go-to” approach when the economy slows — while the central bank is actually pumping more money into the system as well as also urging banks to offer more loans at cheaper rates to little businesses.

brand-new yuan loans exceeded expectations in July, statistics showed on Monday, in one of the few bright spots from the most recent data.

“Admittedly, infrastructure spending may soon bottom out given the recent shift toward a looser fiscal stance as well as also monetary easing should eventually drive a turnaround in credit growth,” Julian Evans-Pritchard, senior China economist at Capital Economics, wrote in a note.

“However, these are unlikely to put a floor beneath economic growth until the middle of next year.”

With the economy shifting into lower gear even without a trade shock, Capital Economics has predicted China’s central bank will soon cut its official lending rate for the 1st time since 2015, though most analysts predict a more modest yet steady stream of support measures in coming months.

The Shanghai “Nifty 50” stock index fell about 0.8 percent after the disappointing data, which added to a sour mood in global financial markets.

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