China’s investments continue to worsen according to the latest data released by the National Bureau of Statistics of China on Monday (Dec.15).
In the first 11 months to November, investment in equipment, buildings, and other fixed assets outside China’s rural households contracted by 2.6 per cent from the same period a year ago, according to official data.
The investments have deteriorated from the 1.7 percent decline over the 10-month period ending October.
Fu Linghui, spokesperson for the statistics bureau, said at a news conference in Beijing that the fall in fixed asset investment was largely driven by a slowdown in property investment.
Separate data released on Dec. 15 showed that the investment growth in real estate had plummeted by 15.9 percent over the same period ending November, a deterioration from 14.7 per cent decline in the first 10 months.
China’s property market is one of the three key pillars of the country’s economic growth and accounts for nearly a quarter of the country’s gross domestic product.
The property sector has been stuck in a downturn since mid-2021, eroding household wealth and weighing heavily on consumption.
Vanke, a state-backed real estate developer giant, plans to convene a second bondholder meeting later this week as it battles to avert default after investors had earlier rejected the company’s plan to delay repayment by a year, according to a filing from Shanghai Clearing House.
Home prices across 70 major cities in China continue to fall in November, official data showed on Dec. 15.
New home sales by value fell by 11.2 percent in the 11-month period ending November, steeper than the 9.4 percent drop recorded in the 10-month period ending October.
“The continued slide in the property market remains one of the most significant risks to China’s efforts to shift to a domestically demand-driven growth model,” Lynn Song, chief economist for Greater China at ING Bank, wrote in a note.
“The wave of support in 2024 showed some promise, with prices stabilising toward the start of 2025. However, this may require continued and concerted efforts, as the downturn resumed after a few months of policy inertia,” Song added.
“There remains no easy answer for ending the downturn.”
IMF Calls for Reform
The head of the International Monetary Fund (IMF), Kristalina Georgieva, urged China to rebalance its economy away from exports toward domestic consumption, in her Opening Remarks at the 2025 China Article IV Consultation Press Conference in December.
“Domestic demand in China has been persistently weak, in part because the property sector is still on a shaky footing. This has depressed consumer confidence, leading to weak consumption and deflationary pressures.”
“Add to this, the challenges from slowing productivity growth, high corporate and public debt levels, decreasing returns to investment, and an aging population. Taken together, these factors point to slower growth going forward,” Georgieva said.
“As the second largest economy in the world, China is simply too big to generate much growth from exports. And continuing to depend on export-led growth risks furthering global trade tensions.”
