China out to offset coronavirus impact with construction boom, but sustainability in doubt
- China’s industrial production data for May showed all categories of fixed asset investment picked up, including steel production, cement output and excavator sales
- But China’s property sector is unlikely to be able to sustain recent pace for rest of the year, analysts say, as China seeks to offset the economic impact of the coronavirus
Questions have been raised as to whether China can sustain the strong construction activity drive intended to aid its economic recovery after seemingly turning to tried and tested infrastructure and property construction to bolster growth and jobs.
Strong government support for infrastructure spending is likely to be sustained for the rest of the year, but it remains unclear whether the recent strength in the property market will continue in the months ahead, analysts said.
We don‘t see bricks and mortar infrastructure investment growing even though the production of construction machinery picked up according to industrial production data
“We don‘t see bricks and mortar infrastructure investment growing even though the production of construction machinery picked up according to industrial production data. That could imply that growth in construction activity is mainly for property markets instead of infrastructure,” said ING this week, adding that China’s investment picture is a “mixed” one.