Business / Macro

Fixed asset investment to slow in Q2

(Xinhua) Updated: 2014-05-26 13:50

BEIJING - China's fixed asset investment is expected to grow by 17 percent year on year in Q2, the China Securities Journal reported on Friday, citing a report from the State Information Center.

The projection is a further slowdown from 17.6 percent for Q1. The report by the government think tank said investment in manufacturing and housing will grow more slowly while investment in infrastructure will pick up. Factors including capital constraints and declining house sales are taking a toll on fixed asset investment.

Property sales dropped 6.9 percent in the first four months from a year earlier in terms of floor space and fell 7.8 percent in value. Investment in property will slow because of decreasing sales and tightened lending.

If a deep correction takes place in the housing market, it may cause "systematic risk", the report said. Rising risks include retail sales, expected to grow by 12.4 percent year on year up from 12 percent in Q1.

There are also favorable developments that could stabilize fixed asset investment, the report said, citing government support for infrastructure projects such as railways, information facilities, clean energy and petrochemical industrial bases, among others.

China's invitation for social capital to invest in about 80 infrastructure projects will also help investment.

China's economic growth dipped to 7.4 percent in the first quarter of the year, the lowest level since the third quarter of 2012.

Last month, the center forecast China's economy would expand by around 7.4 percent in Q2, with notable downward pressure and rising financial risks.

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