Chinese investment surged in May on the back of government pump-priming and a recovery in the property sector.
The National Bureau of Statistics said investment in urban areas in fixed assets such as apartment buildings and roads rose 32.9% in the first five months from a year earlier, compared with a 30.5% rise in the first four months.
Economists said that translated into a 40% leap in May alone. Adjusted for inflation, the increase was even greater because Chinese prices have been falling for several months.
The median forecast of economists polled by Reuters was for a rise of 31.0%.
Economists attributed the strength in investment to the government’s RMB 4 trillion($585 billion) economic stimulus plan, announced in November, and an associated record surge in credit growth from the state-dominated banking system.
The need for strong domestic stimulus was underscored by customs data showing that exports and imports fell in May from year-earlier levels for the seventh month in a row — and at an accelerating pace.
Feng Yuming, an economist with Orient Securities in Shanghai, said, ‘External demand remains weak as the U.S. and European economies are still contracting, so it’ll be hard for China’s exports to see a quick rebound.’
The Guardian reported the real estate sector, which accounts for almost a quarter of fixed investment, saw growth of 6.8% in the first five months, up sharply from 4.9%in the January-April period.
Leading developers have been increasing their land purchases — which are included in the investment figures — as they judge that a recovery in property prices and transactions is durable after an 18-month slump in the sector.
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