By Xander Snyder
For China, keeping economic growth sustainable keeps getting harder and harder. Last week, the Chinese government released a report that showed the annual growth of domestic fixed asset investment hit its lowest point in 22 years during the period from January to May. At almost 45 percent, investment is the largest component of China’s gross domestic product (ahead of consumer spending and exports). China needs to keep building construction and development projects to prevent a cyclical downturn from threatening employment and social stability. A slowdown in investment, therefore, portends a general economic slowdown. It’s important to understand its scale and what caused it.
Fixed asset investment is a broad category that encompasses all sorts of investments, including agriculture, construction and manufacturing, and infrastructure and services, so long as the investment is toward a physical asset. In China’s case, much of the reduced growth is a resul