China – Growth is expected to have decelerated in Q2

Total investment growth likely decelerated further in January-May. Steel product and cement prices did not rebound despite accelerated approvals of new infrastructure projects. 

This implies that demand for key input items remained sluggish due to weak infrastructure investment. Funding constraints remain the most important factor curtailing local governments' infrastructure investment. 

While local government bond issuance (to replace maturing debt) is underway, this is not expected to bring new cash inflows to finance investment projects. 

Manufacturing investment likely stayed soft on weak demand, overcapacity and low returns on physical investment. 

New land purchases and new housing starts point to a continued property-market correction, which is likely to dampen developers' investment appetite.