BEIJING, CHINA / RankWire.AI / – In July, China’s investment activity experienced a deeper contraction as a result of ongoing weaknesses in the property market and a reduction in capital expenditure, adversely affecting the country’s economic momentum. During the first seven months of 2026, fixed-asset investment declined by 6.7% compared to the same period last year. The National Bureau of Statistics disclosed that total investment, excluding rural households, amounted to 26.03 trillion yuan. Additionally, investment figures for July showed a 1.42% decrease from June. While retail sales and industrial output continued their growth trends, both indicators experienced a slowdown in annual expansion during the month.
The housing sector remained the predominant factor contributing to the reduction in fixed investment, with real estate investments dropping 19.2% from January to July. Infrastructure investment saw a decrease of 3.6%, and manufacturing investments fell by 1.7%. Private sector investments decreased by 9.4% year-over-year. Even when excluding property development, total fixed-asset investment saw a decline of 3.7%, illustrating that the decline extended beyond the housing market and impacted multiple vital sectors of the domestic economy.
Consumer expenditure also showed signs of weakening in July, with retail sales increasing by only 0.6% from the previous year to 3.90 trillion yuan, a slowdown compared to June’s 1.0% rise. Industrial production grew by 4.5%, but this figure was lower than the 5.3% registered in the previous month. Factory output rose 5.3% over the first seven months of the year. The official manufacturing purchasing managers’ index (PMI) dropped to 49.2 in July from 50.3 in June, marking a shift below the 50 threshold that distinguishes economic expansion from contraction.
Property sector’s ongoing weakness contributes to overall investment decline
The pace of China’s investment decline has been gradually intensifying in recent months, with fixed-asset investment shrinking 1.6% during the first four months of 2026, and 4.1% through May. The contraction deepened to 5.7% in the first half of the year before reaching 6.7% through July. The property market indicators also remained under pressure, with the floor space of newly sold commercial buildings decreasing by 11.8%, and the sales value dropping 13.1% to 4.27 trillion yuan over the seven-month period.
Despite the overall downturn, several high-tech sectors continued to attract increased investment. Investment in high-tech industries grew by 5.0% from January to July, with information services rising by 19.2%, aerospace vehicle and equipment manufacturing increasing by 12.3%, and electronic and communication equipment manufacturing up by 7.1%. Additionally, investments in intellectual property products went up by 9.1%, while high-tech manufacturing output rose by 13.8%, and equipment manufacturing increased by 9.7% during the same period.
Exports outperform domestic spending amid slowing economic activity
China’s trade figures continued to show robust growth, contrasting with the subdued investment figures. Total merchandise imports and exports reached 30.13 trillion yuan in the first seven months of 2026, reflecting a 17.3% increase. Exports climbed by 14.0% to 17.44 trillion yuan, and imports expanded by 22.0% to 12.69 trillion yuan. In July alone, exports rose by 17.8% from a year earlier, while imports increased by 21.2%. Online retail sales of goods and services also grew by 4.8% during the January to July period.
The economy’s expansion slowed to 4.7% year-over-year during the first half of 2026, with growth in the second quarter easing to 4.3% from 5.0% in the first quarter. Consumer prices rose by 0.5% in July compared to the previous year, and the official urban unemployment rate was recorded at 5.2%. In late July, the Communist Party Politburo called for stronger counter-cyclical measures and efforts to boost domestic demand. These developments follow recent weaker readings in investment, retail sales, and industrial output, highlighting ongoing economic challenges.