China’s Private Firms and Manufacturers are Investing Again

China’s manufacturers and private businesses ramped up investment in August, buoying sentiment hit by the U.S. trade war and a historic economic slump.

Manufacturing investment posted the first gain since the virus outbreak, rising 5% from a year earlier, according to calculations by Nomura Holdings Inc. based on statistics bureau data. Investment by privately-owned firms was also positive in August, jumping 15.1%, Nomura’s data showed.

Improving Capex

Private firms and manufacturers are making more investment

Source: Nomura Holdings Inc

Meanwhile, investment led by the state, a key driver of China’s recovery following the pandemic, has moderated. The growth of infrastructure investment decelerated for a third month in August, and investment by state-owned enterprises fell, according to Nomura. Its Chief China Economist Lu Ting said he expects infrastructure investment to rise notably in coming months due to strong government bond sales.

Moderating Pace

China’s traditional investment drivers are losing steam

Source: Nomura Holdings Inc.

The data adds to other signs that investment sentiment in the country has improved in recent months. A credit indicator that captures demand deposits by households and businesses had the
fastest
growth in two-and-a-half years last month, indicating companies have more money on hand and are planning investment.

— With assistance by Sharon Chen, and Yinan Zhao