China's fixed asset investment recovers but risks remain

FAI growth stood at 9.0% y-o-y in September.

Research firm BMI sees downside risks to fixed asset investment (FAI) in China over the coming quarters as the pick-up in government-led infrastructure investment will not be

sufficient to fully compensate for slower manufacturing and real estate investment growth.

"We expect that the Chinese central government will continue to actively promote PPP projects and will speed up the implementation process in an effort to stimulate private investment and sustain economic growth," it said.

China's FAI growth came in at 9.0% y-o-y in September, up slightly from an expansion of 8.2% y-o-y in the prior month.

Although growth has recovered from its low of 3.9% y-o-y in July, BMI expects FAI to grow at a slower pace over the coming quarters, given that manufacturing investment will remain subdued and the fact that the pick-up in infrastructure investment will not be sufficient to compensate for slower real estate investment.

"We expect that the Chinese central government will continue to actively promote private-public partnership (PPP) projects and will speed up the implementation process in an effort to stimulate private investment and sustain economic growth," it said.