Korva is a scroll of the internet’s best ideas.
China's investment fell 6.7 percent
Investment slump
Fixed asset investment covers infrastructure, plants, and machinery, and it accounts for a huge proportion of Chinese growth. Real estate investment in the first seven months is down 19.2 percent year on year as new construction and funding for developers dry up. Infrastructure and manufacturing investment have softened as well.
Consumers and jobs
Government data also showed retail sales growing just 0.6 percent year on year, short of the 1.5 percent target. The urban unemployment rate was 5.2 percent in July, up from 5 percent in June.
Stock markets
On Monday, the Shanghai composite rose 1.41 percent and the Shenzhen component rose 2.44 percent.
Why does fixed asset investment drive China's growth?
China has long channeled a large share of output into building roads, rails, factories, and housing. World Bank data show gross capital formation above 40 percent of China's GDP for most of the 2010s, far higher than in most large economies. Because investment is also spending, a slowdown in it subtracts directly from measured growth.
How does a property slump spread to other industries?
Housing construction consumes large amounts of steel, cement, glass, and appliances, so slower building cuts orders across those sectors. China's developers have commonly sold apartments before they were built, using buyers' payments to fund construction. When presales fall, developers have less cash to start new projects. Investment in new construction then drops further.
How does China count urban unemployment?
The National Bureau of Statistics publishes a surveyed urban unemployment rate drawn from household labor force surveys. It follows International Labour Organization definitions, under which anyone who worked at least one hour in the reference week counts as employed. Before 2018, China published only a registered unemployment rate, which counted jobless urban residents who registered with local offices.
More from The Prof G Pod with Scott Galloway
