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China investment slows, but high metals prices show strength

Official data released Friday showed China’s economy remained broadly stable in August, but investment in infrastructure slowed, despite supportive policy.

In fact, this year through August, investment in factories, railways and other infrastructure projects fell to its slowest pace in more than 25 years, according to The Wall Street Journal.

But Bloomberg economists wrote on Friday that the readings for August, overall, were positive for policymakers, and showed that a sharp deceleration has been averted, despite headwinds.

The data also contradicts the higher prices and increased production of steel and aluminum seen this summer. In July China produced a record amount of steel and near-record amount of aluminum. Steel prices rose to the highest level in six years.

Since the escalation in trade tensions with the US, steel prices have diverged from China’s falling stock market, with China’s Nanhua rebar steel futures index gaining 22% this year, as of late August.

If steel and aluminum production and prices are high, there is no reason to expect infrastructure spending to fall. That could mean last month’s number was distorted in some way or backward-looking

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