China’s national infrastructure investment growth has fallen to historic lows, growing 2.8% year-on-year in July compared with 17% the same month just two years earlier, according to data from the National Bureau of Statistics, reported the Financial Times.
While the US’s deepening trade war with China has weighed on exports and consumer sentiment, most economists agree that the bulk of the slowdown is a result of Beijing’s battle to keep debt levels under control, said FT.
Infrastructure spending is generally funded by the issuance of local government bonds that are mostly bought by state banks, helping to push China’s government debt up to 73% of GDP last year, according to the IMF.