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Strong sales of China's construction equipment suggest construction boom

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The robust growth of sales of construction equipment in November could mean Beijing's efforts to boost infrastructure investment amid a slowing economy are taking effect.

Beijing

SALES of construction equipment in China saw robust growth in November, suggesting that Beijing's efforts amid a slowing economy might be taking effect.

Excavator sales from the country's 25 leading excavator manufacturers rose 21.7 per cent last month from a year earlier, according to the China Construction Machinery Association, almost twice as fast as October's 11.5 per cent increase.

Heavy trucks sales were up 13.8 per cent during the same period, about the same pace seen in October, the China Association of Automobile Manufacturers said.

Excavator and heavy truck sales are leading indicators for infrastructure investment, given their use in construction projects. Komatsu, a Japanese manufacturer of heavy building machines such as excavators, reported that its equipment in China was used 1.8 per cent more in November compared to the same month last year, the first gain since March.

As downward pressure on China's economy mounts, Beijing has sought to boost activity, especially by using infrastructure spending.

However, that has been slowing for most of the year, with fixed-asset investment growing 5.2 per cent in the first ten months, down from the 5.4 per cent increase in the January-September period. China is expected to release November data on Dec 15.

The policy looks set to continue into 2020, with the Finance Ministry already earmarking 1 trillion yuan (S$0.19 trillion) in special purpose bonds for use early in 2020.

There is a general expectation that local governments will sell more of the debt next year to pay for infrastructure.

Huangshan City in Anhui Province announced on Wednesday that it had already received a quota of special purpose bonds and allocated the funds to specific projects, including a high-speed railway and reservoirs. BLOOMBERG