China Sends Officials to Seven Regions to Investigate Investment Slowdown, Reports Reuters

China Investigates Slowdown in Private Investment

China has dispatched teams of officials to seven regions to examine a significant decline in private investment, as announced by the country’s cabinet. The State Council has sent representatives from the National Development and Reform Commission (NDRC), the Ministry of Industry, and other departments to the capital, Beijing, as well as the provinces of Liaoning, Anhui, Shandong, Henan, Hubei, and Qinghai.

The objective of these teams is to assess how local governments are executing measures aimed at boosting investment and ensuring fair conditions for private enterprises, which have been facing challenges accessing funding and markets.

Despite an unexpected economic growth spurt in the second quarter of 2016, fueled by a housing boom and government infrastructure spending, investment from private firms—who contribute more than 60 percent of total investment in China—plummeted to a historic low in the first half of the year. This decline is largely attributed to businesses scaling back in response to a sluggish economic outlook and weak export performance.

Moreover, Chinese banks generally favor lending to state-owned enterprises over private firms. According to analysts, the interest rates for bank loans in the second quarter were approximately 6 percentage points higher for private companies compared to their public counterparts.