Women working at a clothes factory in Huaibei city, Anhui province, China - 19 Jan 2016

BEIJING Though China’s economic growth of 6.7 percent in the second quarter beat expectations, the country’s industrial economy is showing signs of a protracted slowdown due to overcapacity, lack of expansionary investment and concerns over government policies and the macro economy, according to a survey released Wednesday by the Cheung Kong Graduate School of Business.

The survey of more than 2,000 Chinese firms from sectors ranging from mining to footwear found that in the second quarter of 2016, more than 60 percent of companies reported oversupply in the domestic market due to weak demand. The number of firms reporting oversupply issues is at a historic high, the study said.

It also found that stimulus infused by Beijing into the economy as part of an effort to stabilize growth has not entered the real economy, instead reaching real estate and commodities, causing a “rapid run-up of asset prices,” said Gan Jie, a finance professor who wrote the report.

“Government investments are being made into infrastructure, but as private investment continues to decline, it is clear that monetary and fiscal stimuli alone cannot revive the industry given the severe overcapacity that exists,” Gan said, noting the overcapacity problem is the result of over-investment in sectors ranging from footwear and leather to mining and agriculture.

“There is still a long way to go to absorb overcapacity,” she said.

The survey’s Business Sentiment Index – similar to the U.S. Consumer Confidence Index — came in at 46 for the second quarter. A number below 50 indicates contraction as firms issued concerns over current and future operating conditions as well as investment timing. The number of companies that substantially reduced employees also increased significantly last quarter, the survey said.