China’s reliance on infrastructure to drive overall investment hit a new high last month, raising worries that Beijing’s intensifying crackdown on local government debt, which mainly finances infrastructure, will drag down overall growth.
Fixed-asset investment remains the biggest engine of China’s economy and also fuels global demand for commodities such as coal, steel and base metals. Fixed investment contributed 45 per cent to China’s GDP last year, by far the highest share of any major economy. The US share is 22 per cent, while Japan’s is 30 per cent.
The infrastructure share of overall fixed-asset investment hit 21.4 per cent in the year to July, the highest on record, according to FT calculations of official data. That compares with 17.7 per cent for real estate.