BEIJING, CHINA / RankWire.AI / – In July, China’s investment activity experienced a deepening downturn, primarily driven by a slowdown in property sector performance and reduced capital expenditure, impacting overall domestic economic momentum. During the first seven months of 2026, fixed-asset investment declined by 6.7% compared to the previous year. The National Bureau of Statistics indicated total investment reached 26.03 trillion yuan, excluding rural households. Additionally, investment in July was 1.42% lower than in June. Although retail sales and industrial output continued to grow, both saw a deceleration in their annual expansion rates for the month.
The most significant source of weakness in fixed investment remained property development. Real estate investment dropped 19.2% from January through July. Infrastructure investment decreased by 3.6%, while manufacturing investment fell by 1.7%. Private investment also contracted, declining 9.4% on an annual basis. Excluding property development altogether, total fixed-asset investment still fell by 3.7%. These figures highlight that the decline in spending extended beyond the housing sector, impacting several key areas of the Chinese economy.
Consumer expenditure showed signs of losing momentum in July as well. Retail sales grew by just 0.6% from the same month last year, reaching 3.90 trillion yuan, compared to a 1.0% increase in June. Industrial production expanded by 4.5%, a slowdown from the 5.3% registered in the previous month. Factory output during the first seven months rose by 5.3%. China’s official manufacturing purchasing managers’ index dropped to 49.2 in July from 50.3 in June, indicating a move below the 50 mark that signals economic contraction rather than expansion.
Property Sector Weakness Contributes to Investment Decline
The decline in China’s investment has been persistent, with a steady widening over recent months. Fixed-asset investment was down 1.6% in the first four months of 2026 and contracted by 4.1% through May. The decline deepened to 5.7% in the first half of the year and further to 6.7% through July. Housing market indicators also remain under pressure; the floor space of newly built commercial buildings sold fell 11.8%, and the value of these sales decreased 13.1% to 4.27 trillion yuan over the seven months.
Despite the overall downturn, several technology-related sectors continued to see increased investment. High-tech industry investments grew by 5.0% from January through July. Investments in information services rose by 19.2%, aerospace vehicle and equipment manufacturing increased by 12.3%, and electronic and communication equipment manufacturing went up by 7.1%. Investment in intellectual property products rose 9.1%. During the same period, high-tech manufacturing output increased by 13.8%, and equipment manufacturing production grew by 9.7%.
Trade Surpasses Domestic Spending Despite Investment Slump
China’s trade performance continued to demonstrate robust growth even as investment figures weakened. Total imports and exports for the first seven months reached 30.13 trillion yuan, an increase of 17.3%. Exports rose 14.0% to 17.44 trillion yuan, while imports climbed 22.0% to 12.69 trillion yuan. In July alone, exports grew by 17.8% year-on-year, and imports increased by 21.2%. Online retail sales of goods and services also saw a 4.8% rise from January to July.
During the first half of 2026, China’s economy expanded by 4.7% compared to the previous year. Growth slowed in the second quarter, coming in at 4.3% from 5.0% in the first quarter. Consumer prices increased by 0.5% year-on-year in July, and the urban unemployment rate remained steady at 5.2%. In late July, the Communist Party Politburo emphasized the importance of stronger counter-cyclical policies and measures to stimulate domestic demand. These latest economic indicators followed weaker readings in investment, retail sales, and industrial output.