​China sees tepid growth in consumption, infrastructure

China's consumption growth and infrastructure expansion slowed down in July, but robust investments in manufacturing and the private sector bode well for the future, as shown by the latest data from the National Bureau of Statistics (NBS).

In the first seven months of this year, China's fixed asset investments went up by 5.5 percent to RMB 35.5798 trillion. This growth is 0.5 percentage point less than in the first half of 2018. Consumption was up in July but at a slower rate of 8.8 percent, 0.2 percentage point less than in June.

The slower growth in fixed asset investments is primarily caused by the tepid infrastructure expansion, said Zhang Liqun, a researcher of the Development Research Center of the State Council, in an interview with the Shanghai Securities News. For the first seven months, infrastructure investments at home went up by a mere 5.7 percent, 1.6 percentage points down from the first half of this year.

Regarding the shrinking consumption growth, he believed the two percent drop in auto sales is to blame, adding that this slump in car sales is a short-term phenomenon considering the huge growth potential in the future.

Aside from these slowdowns, good news abounds too. The economic fundamentals continued to improve this year as investments in real estate, manufacturing and the private sector gathered momentum.

From January to July, investments in manufacturing, real estate and private sector saw faster growth of 7.3 percent, 8.8 percent and 10.2 percent respectively. Industrial output in July also sustained strong growth of six percent, the same as in June.

Even for the sluggish infrastructure sector, positive signs are on the horizon as local governments display their persistent interest in expressways, high-speed railroads, and urban mass transit projects.

At the end of July, the National Development and Reform Commission (NDRC), China's economic planner, gave the green light to a RMB 78 billion urban transit project in the northeastern city of Changchun, the first such approval since August 2017.