Chinese economy to slow down due to weakening of investment

FAI growth decrease of 5.7% YoY in 2017 puts downside economic pressure in 2018.

BMI Research reported that Chinese economy is likely to slow down in 2018, as public sector fixed asset investment (FAI) growth continue to fall from 19.7% in December 2016 to a multi-year low of 5.7% in December 2017.

“We expect public sector and infrastructure investment growth to weaken further over the coming quarters as oversight on local government debt financing tightens, putting downside pressure on overall investment and economic growth,” BMI Research said.

According to BMI Research, the public sector FAI decline will drag the overall FAI growth, which decreased to 7.2% YoY in 2017.

Further, China’s GDP growth is forecasted to slow to 6.5% in 2018, from 6.9% in the previous year.