BEIJING, CHINA / RankWire.AI / – In July, China experienced a deepening slowdown in its investment sector, driven by weakening property markets and reduced capital expenditure, impacting the country’s overall economic activity. During the first seven months of 2026, fixed-asset investment contracted by 6.7% compared to the previous year. According to the National Bureau of Statistics, total investment, excluding rural households, amounted to 26.03 trillion yuan. Moreover, investment figures for July dropped 1.42% from June. Although retail sales and industrial output continued to grow, both indicators displayed a deceleration in their annual expansion rates for the month.
The primary factor behind the sluggish investment figures was the persistent weakness in property development, which remained the most significant drag. Real estate investment declined by 19.2% from January to July. Infrastructure investment decreased by 3.6%, while manufacturing investment fell 1.7%. Private sector investment showed a 9.4% decline year-on-year. Even after excluding property development, overall fixed-asset investment still dropped 3.7%. The data indicated that weaker spending extended beyond the housing sector, affecting multiple key areas of the domestic economy.
Consumer spending also slowed down in July. Retail sales increased by 0.6% year-on-year to 3.90 trillion yuan, following a 1.0% rise in June. Industrial production expanded by 4.5%, down from 5.3% in the previous month. During the first seven months, factory output grew by 5.3%. China’s official manufacturing purchasing managers’ index fell to 49.2 in July from 50.3 in June, indicating a contraction as the index dropped below the 50 threshold that separates growth from decline.
Weak property sector continues to hinder investment growth
The trend of declining investment has become more pronounced in recent months. Fixed-asset investment shrank by 1.6% in the first four months of 2026, and by 4.1% through May. The contraction persisted into the first half of the year at 5.7%, before worsening to 6.7% through July. Real estate indicators remained under pressure, with the floor space of newly sold commercial buildings decreasing by 11.8%, and their sales value dropping 13.1% to 4.27 trillion yuan over the seven-month span.
Despite the broader decline, certain technology sectors attracted increased investment. High-tech industry investment grew by 5.0% from January through July. Investment in information services increased by 19.2%, aerospace vehicle and equipment manufacturing rose by 12.3%, and electronic and communication equipment manufacturing grew by 7.1%. Investment in intellectual property products advanced 9.1%, with high-tech manufacturing output up 13.8%, and equipment manufacturing production climbing 9.7% during the same period.
Exports outpace domestic spending despite sluggish investment data
China’s merchandise trade continued to show strong growth, even as investment figures remained weak. Total goods imports and exports reached 30.13 trillion yuan in the first seven months, representing a 17.3% increase. Exports rose by 14.0% to 17.44 trillion yuan, while imports jumped 22.0% to 12.69 trillion yuan. In July, exports increased by 17.8% year-on-year, and imports grew by 21.2%. Online retail sales of goods and services also rose by 4.8% during the January to July period.
For the first half of 2026, China’s economy expanded by 4.7% compared to the previous year. Growth slowed in the second quarter to 4.3% from 5.0% in the first quarter. Consumer prices rose 0.5% year-on-year in July, with the urban unemployment rate holding at 5.2%. In late July, the Communist Party Politburo called for more robust counter-cyclical measures and policies to boost domestic demand. These latest figures followed a series of weaker data points related to investment, retail sales, and industrial production.