The Western media has largely missed arguably the most important recent economic development in China: the dramatic fall of private investment. According to official statistics, nominal private fixed-asset investment grew only 5.2% in the first four months this year, half the rate of 2015. Since private fixed-asset investment accounted for nearly two-thirds of total investment before its recent decline, a sustained fall in private capital expenditures will further exacerbate China's economic slowdown.
Alarmed by this development, the State Council has prescribed a series of measures to revive private investment. In the much-noted interview published in the People's Daily on May 9, the unnamed "authority," widely believed to be the chief economic adviser to President Xi Jinping, flagged the substantial fall in private investment as the top macroeconomic risk.
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