{
  "title": "What’s Driving Investment in China?",
  "publication": "IMF Working Papers, November 1, 2006",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2016/12/31/whats-driving-investment-in-china-20067",
  "canonical": "https://www.imf.org/en/publications/wp/issues/2016/12/31/whats-driving-investment-in-china-20067",
  "overlayPath": "/en/publications/wp/issues/2016/12/31/whats-driving-investment-in-china-20067/index.md",
  "summary": "Investment has grown rapidly in China in recent years, reaching more than 40 percent of GDP. Despite good progress on bank and enterprise reforms, weaknesses remain that could contribute to inefficient investment decisions.",
  "sections": [
    {
      "heading": "Summary",
      "content": "- Investment has grown rapidly in China in recent years, reaching more than 40 percent of GDP.\n- Despite good progress on bank and enterprise reforms, weaknesses remain that could contribute to inefficient investment decisions.\n- Manufacturing, infrastructure, and real estate have been the drivers of fixed asset investment.\n- Econometric analysis presented in the paper suggests that manufacturing investment is strongly correlated with firms' liquidity, largely retained earnings.\n- Analysis of residential real estate investment shows that it is weakly correlated with real household income growth and real mortgage interest rates."
    },
    {
      "heading": "Key Findings and Evidence",
      "content": "- Manufacturing investment is strongly correlated with firms' liquidity (largely retained earnings).\n- Residential real estate investment is weakly correlated with:\n  - real household income growth\n  - real mortgage interest rates\n- Fixed asset investment in China has been driven by:\n  - manufacturing\n  - infrastructure\n  - real estate"
    },
    {
      "heading": "Policy Implications and Recommendations",
      "content": "- Reducing liquidity in firms could slow investment in manufacturing and real estate. One example policy measure:\n  - requiring state-owned enterprises to pay dividends to the government\n- Using monetary policy to reduce liquidity (increase real interest rates) would slow investment in manufacturing and real estate.\n\n---\n\n Content in this bundle\n\n- Annex I. Investment and Saving Data by Sector\n  - Annex I. Investment and Saving Data by Sector (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Annex I. Investment and Saving Data by Sector (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/31/whats-driving-investment-in-china-20067"
    }
  ],
  "bullets": [
    "[Markdown version](/en/publications/wp/issues/2016/12/31/whats-driving-investment-in-china-20067/index.md)",
    "[Structured JSON version](/en/publications/wp/issues/2016/12/31/whats-driving-investment-in-china-20067/index.json)",
    "[Bundle manifest](/en/publications/wp/issues/2016/12/31/whats-driving-investment-in-china-20067/bundle-manifest.json)",
    "Authors: Steven A Barnett, R. Brooks",
    "Published: November 1, 2006",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781451865257.001",
    "Investment has grown rapidly in China in recent years, reaching more than 40 percent of GDP.",
    "Despite good progress on bank and enterprise reforms, weaknesses remain that could contribute to inefficient investment decisions.",
    "Manufacturing, infrastructure, and real estate have been the drivers of fixed asset investment.",
    "Econometric analysis presented in the paper suggests that manufacturing investment is strongly correlated with firms' liquidity, largely retained earnings.",
    "Analysis of residential real estate investment shows that it is weakly correlated with real household income growth and real mortgage interest rates.",
    "Manufacturing investment is strongly correlated with firms' liquidity (largely retained earnings).",
    "Residential real estate investment is weakly correlated with:",
    "Fixed asset investment in China has been driven by:",
    "Reducing liquidity in firms could slow investment in manufacturing and real estate. One example policy measure:",
    "Using monetary policy to reduce liquidity (increase real interest rates) would slow investment in manufacturing and real estate.",
    "**Annex I. Investment and Saving Data by Sector**"
  ],
  "related": [
    {
      "title": "Annex I. Investment and Saving Data by Sector",
      "role": "document",
      "sourceUrl": "https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/2006/_wp06265.pdf",
      "summary": {
        "path": "/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/2006/_wp06265.pdf.md",
        "mime": "text/markdown"
      },
      "binary": {
        "path": "/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/2006/_wp06265.pdf",
        "mime": "application/pdf"
      }
    }
  ],
  "alternates": {
    "markdown": "/en/publications/wp/issues/2016/12/31/whats-driving-investment-in-china-20067/index.md",
    "json": "/en/publications/wp/issues/2016/12/31/whats-driving-investment-in-china-20067/index.json",
    "bundleManifest": "/en/publications/wp/issues/2016/12/31/whats-driving-investment-in-china-20067/bundle-manifest.json"
  },
  "generatedAtUtc": "2026-09-18T10:28:50.642Z"
}