BEIJING, CHINA / RankWire.AI / – In July, China’s investment landscape further contracted, primarily due to ongoing weaknesses in the property sector and reduced capital expenditure, which together dampened domestic economic momentum. During the first seven months of 2026, fixed-asset investment declined by 6.7% compared to the previous year. According to the National Bureau of Statistics, total investment excluding rural households reached 26.03 trillion yuan. Additionally, investment dropped 1.42% in July compared to June. While retail sales and industrial output continued to grow, their respective annual expansion rates slowed during the same period.
The biggest obstacle to fixed investment remained the property development sector, which experienced a significant decline. Real estate investment fell 19.2% from January to July. Infrastructure investment decreased by 3.6%, and manufacturing investment also declined by 1.7%. Private sector investment shrank by 9.4% year-on-year. Even when property development was excluded, overall fixed-asset investment still saw a 3.7% decrease. These figures indicate that reduced spending extended beyond the housing market, impacting several vital sectors of China’s economy.
Consumer expenditure showed signs of slowing as well in July. Retail sales grew just 0.6% year-on-year to reach 3.90 trillion yuan, a slowdown from June’s 1.0% increase. Industrial production expanded by 4.5%, down from 5.3% in the previous month. Factory output increased 5.3% over the first seven months of the year. Meanwhile, China’s official manufacturing purchasing managers’ index (PMI) fell to 49.2 in July from 50.3 in June, marking the first time since a long period that the index dipped below the 50 mark, which signifies contraction rather than growth.
Weakness in the property sector continues to drag down investment figures
The downward trend in China’s investment figures has persisted and intensified over recent months. Fixed-asset investment contracted by 1.6% during the first four months of 2026, deepening to a 4.1% decline through May. The contraction accelerated further, reaching 5.7% in the first half of the year and worsening to 6.7% through July. Real estate indicators remain under pressure, with the floor space of newly built commercial buildings sold decreasing by 11.8%, and the total sales value falling 13.1% to 4.27 trillion yuan over the seven-month period.
Despite the broad slowdown, certain technology-related sectors continued to attract increased investment. High-tech industry investment grew 5.0% from January through July. Investment in information services rose sharply by 19.2%, while aerospace vehicle and equipment manufacturing expanded by 12.3%. Electronic and communication equipment manufacturing increased by 7.1%, and investment in intellectual property products went up 9.1%. The output of high-tech manufacturing rose 13.8%, with equipment manufacturing production increasing by 9.7% during the same period of seven months.
Exports Outperform Domestic Spending Despite Economic Challenges
China’s trade figures continued to show robust growth, even as domestic investment faltered. In the first seven months, total goods imports and exports reached 30.13 trillion yuan, marking a 17.3% increase. Exports rose 14.0% to 17.44 trillion yuan, while imports surged 22.0% to 12.69 trillion yuan. In July alone, exports increased 17.8% from a year earlier, and imports grew 21.2%. Additionally, online retail sales of goods and services went up 4.8% during the January to July period.
The overall Chinese economy expanded by 4.7% compared to the previous year in the first half of 2026. Growth slowed slightly in the second quarter, reaching 4.3% from 5.0% in the first quarter. July’s consumer prices increased 0.5% year-on-year, and the urban unemployment rate as surveyed stood at 5.2%. In late July, the Communist Party Politburo emphasized the need for stronger counter-cyclical measures and efforts to boost domestic demand. These latest data points followed weaker indicators in investment, retail sales, and industrial production, signaling ongoing economic headwinds.