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--Drag From Infrastructure Spending Seen
     BEIJING (MNI) - Fixed-asset investment growth in China decelerated to the
lowest level in over 18 years in the first 10 months of the year due to a
slowdown in infrastructure investment and also because of the continued
industrial capacity reduction campaign, according to statistics released Tuesday
by the National Bureau of Statistics.  
     Fixed-asset investment totaled CNY51.78 trillion in the January-October
period, up 7.3% from the year-earlier period but lower than the 7.5% gain in the
first nine months and the 7.4% increase expected in a Market News Survey. 
     The headline reading was the lowest since the January-December 1999 period,
when it was just 6.3%. It was the seventh consecutive month that the
year-to-date investment growth rate has slowed.
     The month-on-month gain was 0.52% in October, down from September's 0.55%
     Infrastructure investment growth inched down to 19.6% year-on-year in the
January-October period, 0.2 percentage point lower than the January-September
period, as China's fiscal spending showed a decrease in October for the first
time this year. 
     Industrial investment grew 3.3% y/y to CNY19.10 trillion, little changed
from the January-September period. Within the industrial sector, investment in
manufacturing grew 4.1% y/y in the first 10 months, compared with 4.2% growth in
the first nine month of this year. 
     Mining sector investment decreased 9.2% on an annual basis, unchanged from
the same 9.2% decline during the first nine months. 
     "Investment in the high energy-consuming manufacturing declined 2.2%
year-on-year," NBS spokesman Liu Aihua told journalists during a briefing on
Tuesday. "Investment continues to play a positive role in optimizing supply-side
     Investment in the agricultural sector grew 13.1% year-on-year to CNY1.71
trillion in the first 10 months, up 1.3 percentage point from the 11.8% growth
in the first nine months, the NBS said. 
     Investment in the services sector grew 10.0% to CNY30.72 trillion in the
first 10 months, down 0.5 percentage point from the January-September period,
the NBS noted.
     "The weak sales volume growth and sluggish new construction in the property
sector could further drag down the performance of investment," Xie Yunliang, an
analyst with Guotai Junan Securities, told MNI.
     In the first 10 months this year, private investment, a main contributor to
overall growth, also slowed, rising 5.8%, down from 6.0% in the
January-September period. Private sector investment accounted for 60.6% of total
fixed-asset investment during the first 10 months of the year.
     "Investment should further slow as manufacturing continues to be sluggish
due to the [government's] overcapacity cut move," Chen Jianheng, an analyst with
CICC Securities, said in a note. 
--MNI Beijing Bureau; +86 (10) 8532 5998; email:
--MNI Beijing Bureau; +86 (10) 8532-5998; email:
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