China’s fixed asset investment (FAI) suffered a sharp setback in October, signalling renewed stress across the real economy as the property downturn continued to erode activity and put a drag on broader investment performance.
According to the latest data from the National Bureau of Statistics, nationwide FAI for the ten months of January through October reached 40.89 trillion yuan (US$5.7 trillion), marking a 1.7% year-on-year contraction. This sharp deterioration compares with a 0.5% decline for the first nine months of the year.
Based on cumulative figures, China’s FAI in October fell 12% to 3.74 trillion yuan from 4.25 trillion yuan in the same period last year. All three major sectors registered year-on-year declines: primary-industry investment contracted 12.4%, secondary-industry investment slipped 8.4%, and tertiary-industry investment plunged 13.5%.
Residential property development investment decreased 13.8% year-on-year to 5.66 trillion yuan in the first ten months. In October alone, the figure dropped 19.4% to 454.9 billion yuan from a year earlier, highlighting the deepening drag from the ongoing property correction.
“Excluding real estate, China’s FAI grew 1.7% in the first 10 months from the same period of last year,” NBS spokesperson Fu Linghui said at a media briefing on Friday. “The decline in property investment dragged down overall investment growth by about three percentage points. Besides, some industries lack sufficient momentum for expansion, which has objectively weighed on investment growth.”
He said the public should view the recent changes in investment growth comprehensively.
“We should not focus solely on current conditions, but adopt a forward-looking perspective. As the world’s largest developing country, China still has vast investment potential as it works toward achieving the level of a moderately developed nation,” he stressed.
Fu said investment in the manufacturing sector rose 2.7% in the first ten months from a year ago. He said high-tech industries showed robust expansion, with aerospace manufacturing up 19.7% and information-services investment growing 32.7%.
“What we’re seeing is further evidence that the world’s second‑largest economy is entering the final quarter on a weakening trajectory,” analysts at Cboe Global Markets, a Chicago-based financial exchange operator, write in a research note.
They write that the sharper‑than‑expected slowdown in investment aligns with softer industrial output and sluggish household consumption.
“The latest figures underscore how vulnerable China remains to swings in both domestic demand and external conditions,” they say. “The export contraction earlier this year was a reminder of how quickly sentiment can shift, and how important it is for policymakers to stabilize expectations.”
Analysts note that global market investors are increasingly seeking clearer guidance on Beijing’s next steps, particularly how authorities plan to balance deeper structural reforms with short‑term stabilization. However, it seems that policymakers are unwilling to deploy large‑scale stimulus for now and are instead prioritizing steady, consistent implementation of existing measures.
Downward spiral
Since the Evergrande Group debt crisis erupted in mid‑2020, China’s property market has been locked in a downward spiral, in which falling home prices are cutting into buyer demand and pulling in consumption and jobs.
In recent years, the government has rolled out multiple measures to shore up demand by loosening purchase rules and instructing banks to support homeowners close to default, but the drag on confidence remains.
NBS data revealed that home prices in the 70 largest Chinese cities’ secondary markets showed broadening weakness. In October, home prices in first‑tier cities fell 4.4% year‑on‑year, with Beijing down 4.7%, Shanghai 3.4%, Guangzhou 6.4% and Shenzhen 3.3%. Second‑tier cities recorded a 5.2% decline, while third‑tier cities saw a 5.7% drop.
“Over the next three years, housing prices may undergo further adjustments, with some regions potentially hitting historic lows,” said Li Daokui, a professor at Tsinghua University’s School of Economics and Management. “This is an inevitable part of the market returning to rationality.”
“For homebuyers, those with genuine housing needs should focus on the fundamentals of livability and avoid areas burdened by high inventory or population outflows,” he said. “Highly leveraged households should restructure their debt and strengthen emergency reserves.”
“Smaller cities with high inventory are still under strong downward pressure, as property developers are cutting prices to push year‑end sales,” said Zhang Bo, head of 58 Anjuke Research Institute. “Prices remain stable at prime sites in tier‑1 cities, but are diverging in tier‑2 cities. In tier‑3 and tier‑4 cities, prices are under heavy pressure.”
“The prolonged correction in the property sector is not only the result of weaker transactions but also a deliberate policy shift as China moves away from the old property‑led growth model,” said Li Yujia, chief researcher at the Guangdong Housing Policy Research Center. “After four years of contraction, the market has fallen to levels last seen in 2009, which suggests we are entering a bottoming phase.”
He added that a genuine recovery would rely on rebuilding the fundamentals that support housing demand, including employment, income growth, social protections and demographic trends. He said that without strengthening these drivers, the market would struggle to regain sustainable momentum.
Consumption and job markets
Some Chinese commentators are issuing sharper warnings about the market’s trajectory, urging homeowners to brace for deeper declines.
“With over 70% of household wealth tied to property, falling home prices directly erode family balance sheets,” says a Guangdong-based columnist using the pseudonym “Weiyang Kandian.”
“A Hangzhou family bought a home for 5 million yuan, now worth 3.5 million, yet still owes 3.8 million on the mortgage,” he says. “In Wuhan, a homebuyer lost the entire down payment as his 1.6‑million‑yuan flat is only worth 1.1 million yuan. These negative‑equity positions don’t just drain savings, but also crush confidence.”
“Surveys show that these families’ consumption falls by up to 37%, far more than other households,” he noted. “Lower home prices pull down land values and construction assets, weaken corporate balance sheets, suppress investment and shrink household wealth, feeding a cycle of weak demand and profit pressure.”
“When spending slows, restaurants, tourism agencies and entertainment premises cut headcounts,” says a Shandong-based columnist writing under the pen name Fanchen Moke. “Job security weakens first in customer-facing industries, where margins are thin and demand falls fast.”
“As property developers and construction firms are downsizing, their workers are now competing for positions in other sectors such as retail, logistics and education, worsening the unemployment situation,” he writes.
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