CHENGDU, China — With more than 100 tall cranes on the skyline, this metropolis in western China looks vibrant at first glance despite the country’s sharp economic slowdown.
But only a few cranes — those building national government projects like a high-speed rail line — are floodlit and busy far into the night. The more numerous cranes looming above the skeletons of future high-rises move much less often, even by day, and are dark and deserted by night.
The pattern among Chengdu’s construction cranes is evident across the country. As summer fades into autumn, Beijing is stepping up investment in a bid to rescue the economy, but consumers, businesses and debt-burdened local governments in China are showing little interest in spending money again.
Economic data released on Sunday by the National Bureau of Statistics showed the extent of the problems. Investment in new buildings and other fixed assets is in the doldrums. Manufacturers are retreating from ambitious production goals as they struggle with bloated inventories of unsold goods. Even the service sector, still underdeveloped and widely seen by economists as full of potential, is showing signs of distress.
“Business is slow these days — just look around this shopping center, there are so few people walking around,” said Zhong Yongping, a beautician in downtown Chengdu, as she woke on Thursday from an afternoon nap while she waited for a customer to show up.
Industrial production grew only 8.9 percent in August from a year ago. That was even slower than economists had expected, and the weakest pace since May 2009, when the global economic downturn was still in full swing.
But the real problem, as signaled by the slow-moving cranes at high-rises in Chengdu, lies in fixed-asset investment, previously the mainstay of the Chinese economy.
“Construction is slowing down,” said Zhao Chenzhen, a young electrical worker, as he and other workers in red hard hats left a darkened high-rise construction site in Chengdu early Friday evening.
President Hu Jintao said in a speech on Saturday at the Apec summit meeting in Vladivostok, Russia, that China’s economy suffered from a “lack of balance, coordination and sustainability.” He strongly hinted at further economic stimulus, saying that, “We will boost domestic demand and maintain steady and robust growth as well as basic price stability.”
Bankers and executives say that across China, developers have slowed construction to the most cash-conserving pace possible without activating default clauses on their loans by stopping work entirely and sending away the cranes.
That slow pace, done on single shifts instead of three shifts around the clock as in the past, also showed up in national data on Sunday.
Fixed-asset investment grew 20.2 percent in the first eight months of this year compared with the same period last year. It was the second-lowest pace since December 2002; only May of this year was marginally lower.
While even 20.2 percent might sound high by international standards, it overstates actual growth by including the replacement of existing factory equipment and buildings that may have worn out, in addition to new investment.
The monthly data also includes extensive double-counting, which Chinese statisticians only eliminate in more comprehensive annual data.
The August figure for investment growth was weaker than expected even though central government agencies in Beijing have started spending more money again. Their investment spending rose last month from year-ago levels for the first time in 15 months, the details of Sunday’s official data showed, as Beijing started trying to revive the economy.
Central government investment spending fell late last year and early this year as the economic stimulus put in place in 2009 wound down.
It was the rest of investment spending that has been weak this summer and remained so in August. Local government investment spending, for example, grew last month at the slowest pace since December 2001 — and local government investment spending in China is 18 times as large as central government investment spending.
Cities across China borrowed and spent huge sums over the last several years and now find themselves financially stretched. To make matters worse for them, the real estate slowdown has hurt their crucial revenues from sales of government-owned land, as falling prices have made developers reluctant to buy more land and build more buildings.
He Yong, a saleswoman at a luxurious apartment complex slowly being built here in Chengdu, sat alone this week in a spacious sales office empty of customers. The apartments sell for $120 to $165 a square foot, Ms. He said, but she quickly volunteered that “we are now offering a 10 percent discount, and if you would like further special discounts, you can contact our sales manager.”
Li Hongzhi, a Chengdu real estate broker, said that prices had dropped 5 percent from a year ago. But the number of apartments changing hands has fallen much more steeply, often a sign that sellers are wary of accepting even lower offers from buyers.
Mr. Li said that his company’s number of completed transactions in the city for already completed apartments had slumped 30 percent in July compared with the previous month, after the national and local government tightened restrictions on real estate speculation in a bid to improve the affordability of housing.
Anecdotal evidence from brokers is often the best guide to real estate prices in China, where government indexes of transactions are flawed.
The national government’s own index of real estate prices attracts skepticism from analysts. Beijing statisticians allow local governments to measure prices based on a few old neighborhoods in each city where few transactions take place, so the national index shows fairly stable prices year after year in a wildly gyrating market.
Private surveys of real estate developers tend to reflect price increases accurately during good times, but few developers have been willing to admit their heavy discounting in the past year.
Other economic statistics released on Sunday also did not paint a cheerful picture. Retail sales were up 13.2 percent in August from a year ago, maintaining the slower pace they have shown through the summer — although part of the slowness reflects lower inflation.
Producer prices plunged 3.5 percent in August from a year ago, an even faster decline than expected, as companies accepted ever-lower prices for their goods in the hope of clearing overstuffed warehouses.
Yet for consumers, inflation actually picked up slightly in August, creeping up to 2 percent, from 1.8 percent in July, as food prices kept rising. Inflation makes it harder for the government to stimulate the economy now without risking a further increase in prices.
Even before the release of Sunday’s data, some economists were already marking down their forecasts for China’s growth this year and next year. Tao Wang, the China economist at UBS, did so on Friday, lowering her forecasts for the third quarter of this year to 7.3 percent and for the fourth quarter to 7 percent — both figures below the government’s target for this year of 7.5 percent.
Ms. Wang also cut her forecast for next year to 7.8 percent, from 8.3 percent.
In addition to weak domestic demand for new apartments and big-ticket purchases like cars, the Chinese economy has suffered from slumping overseas demand, particularly from Europe. That has contributed to a large buildup in inventories of unsold goods, particularly at manufacturers.
Beijing officials are starting to send signals that they plan to help exporters unload their inventories overseas. They have allowed the renminbi to edge down 1 percent since the end of April against the dollar, the main currency in which China conducts its trade, although the renminbi has appreciated 3.5 percent against the euro since then.
Premier Wen Jiabao said after a tour of export zones in southern China last month that measures should be taken by the end of September to help exports. Citing unidentified sources at the Commerce Ministry, the semiofficial China Daily newspaper reported over the weekend a package of initiatives would be started in mid-September, including tax rebates, insurance, loans and other measures.
For now, demand is weak across the Chinese economy.
“I would say my business is down 15 percent this year,” said Ms. Zhong, the beautician. “Customers are tightening their belts and spending less; they are choosing fewer and cheaper treatments than before.”