China: Investment data shows trade war damage – ING

Iris Pang, economist at ING, points out that China’s fixed asset investment grew only 5.2% year-on-year, year-to-date in October, marking its slowest growth rate since the data started in 1998.

Key Quotes

“The weakness here shows that Chinese business investment has been highly affected by the trade war.”

“Investment in the textile industry (-8.5%YoY YTD) and electric equipment (-7.5%YoY YTD) actually contracted. Investment in these areas is only likely to recover when there is substantial progress in the trade negotiations.”

“For most of 2019, investment has been supported by transportation infrastructure investment via the issuance of local government special bonds. As the end of the year approaches, investment in these projects has slowed, shrinking 5.9%YoY YTD though we expect a pick up from 1Q20.”