The collapse in private investment growth in China, a phenomenon that has caused significant concern within the central government, has been brought about by a fundamental shift in the dynamics of the country’s money supply, according to Caixin. For many years, inflows of forex through the country’s current account from a boom in exports were one of the major contributors to the domestic money supply, but is now through new loans to investment projects. Private investment increased by only 2.8% YoY in the first half of 2016, the slowest pace on record – 2015 full-year growth was 10.1%. In spite of the slump, private investment still accounts for the majority of overall fixed-asset investment – more than 61% of the total in the first half of this year.
Categories