Fixed investment growth rate declines in 2016

Fall is in line with government policy to slow spending on infrastructure

The improvement in demand for investment will help consolidate the foundation for domestic economic growth in the current year, after fixed-asset investment in the private sector witnessed a mild uptick at the year-end of 2016, the National Bureau of Statistics said on Friday.

Official data released by the bureau on Friday showed that in 2016, fixed-asset investment increased by 8.1 percent year-on-year, down by 0.2 percentage points compared with the first 11 months.

The decline is in line with the slowing down pace of the government's approval for infrastructural construction projects.

The National Development and Reform Commission, the nation's economic regulator, approved 227 fixed-asset investment projects valued 1.7 trillion yuan ($247 billion) in 2016.

In 2015, the commission approved a total of 280 fixed asset investment projects, valued 2.52 trillion yuan.

Although the year-on-year growth rate of fixed-asset investment slowed down－to the lowest level since 1999－a closer look at the data breakdown points to some promising signs.

Investments made by private companies grew by 3.2 percent in 2016 year-on-year, which was 0.1 percentage points higher than the first 11 months, and the fourth consecutive month to see improvement.

An improvement on the private side indicated some improvement in confidence about the future outlook of the economy, according to Niu Li, an economist at the State Information Center.

Private investment accounts for about 60 percent of total fixed-asset investment, according to the NBS.

Ren Zeping, chief economist of Founder Securities, said the improvement in the private sector was driven up by a warming up in the manufacturing industry and higher-than-expected property investment.

Investment made in the manufacturing industry rose 4.2 percent year-on-year in 2016, up by 0.6 percentage points compared to the first 11 months in 2016, the data showed.

Real estate investment growth was 6.9 percent in 2016, up by 0.4 percentage points higher than the first 11 months, according to NBS.

Zhang Yiping, an economist with China Merchants Securities, said that the month-on-month recovery would provide more growth momentum this year. Zhang said he expected that policies introduced in 2016 to support the private sector－such as expanding channels for private investment－would gradually take effect in 2017.

Yao Yang, dean of the National School of Development at Peking University, said he expected the government to continue using expansionary fiscal measures to drive growth.