Investment falters as industrial activity flags

Official data show investment in the manufacturing sector hit 7.8 trillion yuan in the first half. Provided to China Daily

First-half figures show investors favor central regions, shun east

China's investment growth decelerated further in the second quarter amid flagging industrial activity, and it may remain at a low ebb, economists said, as a massive stimulus is not on the cards.

First-half fixed-asset investment grew 20.1 percent year-on-year to 18.1 trillion yuan ($2.94 trillion), the National Bureau of Statistics said on Monday.

The growth rate was 0.8 percentage point slower than in the first quarter and 0.3 point slower than a year earlier, the NBS said.

First-half investment in central regions grew the fastest, by 23.6 percent, followed by 22.7 percent in the west and 18.7 percent in the east. Investment growth has been slowing since it stood at 21.1 percent in the first two months of the year.

"Investment in the manufacturing sector, which accounts for about 40 percent of total investment growth, has already tumbled to the lowest in a decade," said Lu Zhengwei, chief economist with Industrial Bank Co Ltd.

According to Monday's data, investment in the industrial sector hit 7.8 trillion yuan in the first half, up 15.6 percent from a year earlier. Investment in primary industry and the service sector grew 33.5 percent and 23.5 percent, respectively.

The figures were in line with conditions measured by the HSBC Purchasing Managers' Index, which contracted in May and June. The June reading of 48.2 was the lowest in the past nine months.

Decelerating investment growth partly reflected a continued slowdown of economic expansion, which eased to 7.6 percent in the first half from 7.7 percent in the first quarter.