BEIJING • Growth in China's fixed- asset investment slipped below 10 per cent for the first time since 2000 in the January-May period as a boost from record credit growth seemed to be already fading, putting expectations of further stimulus back on the table.
The government has taken a more cautious stance on stimulus since commentary in official media last month warned of the risks of growing debt, but analysts said signs of weakness in the latest monthly data may spur policymakers into taking additional steps to support the economy.
"I see rising odds of a cut in RRR (banks' reserve requirement ratio) or even a policy rate cut, before the end of the second quarter," Mr Zhou Hao, senior Asia emerging market economist at Commerzbank, said in a note after May activity data was released yesterday.
With the economy not yet on solid footing, other analysts agree more stimulus is likely. "The government will likely launch more fiscal policies such as faster approval of infrastructure projects as downside risk to growth heightens," said ANZ's Mr Raymond Yeung.
A major worry for the authorities is the continued decline in fixed-asset investment by private companies. Overall fixed-asset investment growth fell to 9.6 per cent in January-May from a year earlier.
Investment by private firms slowed to a record low, with growth cooling to 3.9 per cent from 5.2 per cent in January-April and double-digits last year. Private investment so far this year has been the slowest since China began publishing the data in 2012.
China needs to open up its state sector further in order to arrest the steep slowdown in private investment, statistics department spokesman Sheng Laiyun told a news conference, adding that falling prices and industrial overcapacity have affected private investment.
Foreign direct investment in China, meanwhile, declined 1 per cent year-on-year in May, the first decline since December, the Commerce Ministry said on Sunday.
Other data out yesterday was mixed, suggesting that the economy may be bottoming out and less at risk of a hard landing but still struggling to regain traction.
Factory output grew 6 per cent in May from a year earlier, the same as in April.
Analysts believe industrial output has been supported by a government infrastructure spending spree and a further recovery in the property market.
Investment in real estate in May also posted its first year-on-year slowdown in growth since December, though property sales by area surged more than 32 per cent.
Despite a jump in car sales, consumption softened slightly. Retail sales growth, which captures both private and government purchasing, slowed to 10 per cent year-on- year.