Updated 8:47 AM EST, Fri, Mar 05, 2021

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Investment in Chinese Economy Steadily Improves, but Retail Sales Falters

Investment in Chinese Economy.

(Photo : getty images.) A set of new economic data released on Monday depicted a mixed picture of Chinese economy. The data showed that investment scenario in China is improving steadily improving, while retail sales and industrial growth faltered in October.

A new economic data released on Monday showed that investment scenario in Chinese economy is steadily improving. However, doubts persist over economic recovery as other economic data depicted a more grim picture of Chinese economy.

The data on fixed asset investment showed that investment in the first 10 months increased 8.3 percent as compared with same period a year earlier. This was slightly ahead of market expectation.

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Investment by state owned firm expanded by 20.5 percent during the period, although the pace of investment decreased slightly from the first nine month.

In a welcome sign, private investment surged 2.9 percent in October as compared with the 2.5 percent witnessed between January and September. The health of private investment is immensely critical for Chinese economy, as it accounts for nearly 60 percent of overall investment in China.

Experts credited government spending for improvement in investment scenario. However, many argue that the spending has been over the top and has pushed the state debt to an unprecedented level.

Retail Sales and Industrial Growth Faltered in October

Cautious optimism created by investment data was somewhat dampened by faltering growth witnessed on the front of retail sales. The retail sales slowed down to five month low of 10.0 percent in month of October, down from 10.7 percent witnessed in September.

Analyst though feel that October data are too weak to suggest that downturn in consumption will sustain long enough to become a long lasting trend.

Another important data showed that industrial output did not show any improvement in October, rising 6.1 percent - growing by same pace as witnessed in October.

Most analysts are having a mixed feeling about Chinese economy, with many suggesting that economic recovery is still a very long way to go. Especially owing to other important data in October like export -important and bank lending showing less than better results.

Additionally, a slowdown in the critical real estate market has caused considerable concern in the economy.

"We expect growth to hold up well for another quarter or two. However, with credit growth now slowing and the property market beginning to cool the drivers of the recent recovery look set to fizzle out early next year," Capital Economics said in a note.

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