Fixed-asset investments still driving economy, but not sustainable

Feb 07, 2014 | 12:40 PM |

Tags  China steel, fixed-asset investments, automotive, shipbuilding, purchasing managers index, PMI, economic growth, downstream demand China Iron and Steel Association

SHANGHAI — The correlation between China’s growth in gross domestic product (GDP) and steel production suggests that investments, especially fixed-asset investments, still play a large role in the country’s economy. But this investment-driven economy isn’t sustainable.

China’s industrial sector, particularly its steel industry, has been boosted by government initiatives over the past few years. While a lack of supportive policy pushed the country’s purchasing managers’ index (PMI) into contraction during the September 2012 quarter, a "mini-stimulus" from the country’s new leadership in 2013 brought an improved performance.....

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