Investment Slump in China: Economy Slows, Risks Mount

📉 China is facing an unprecedented decline in investment activity, with the scale already being compared to the most severe periods in the history of the country’s modern economy. Fixed-Asset Investment (FAI) for the first ten months of 2025 fell by -1.7% year-on-year. This is the sharpest drop since statistics began being tracked.
Moreover, in October alone, the indicator dropped even more — by approximately -11–12% compared to the previous year, marking the fifth consecutive month of decline.

The real estate sector is suffering the most significant collapse. Investments in this key sector of the Chinese economy fell by -14.7% (YoY). Considering the chronic debt problems of the largest developers, falling housing prices, and declining demand, this sector has become the main source of pressure on the entire investment market.

Infrastructure spending, traditionally used to stabilize the economy, showed almost no growth — just +0.1% (YoY). This is especially concerning given that authorities continue to introduce new stimulus measures, and local governments are actively increasing bond issuance to finance projects. Formally, growth remains positive, but in practice it is already teetering on the edge of zero.

FAI includes both domestic and foreign investments, and the current decline reflects complex changes in China’s growth structure. According to the National Bureau of Statistics and major international media like CNBC and Wall Street Journal, all indicators create a unified negative picture: the economy is trying to maintain momentum, but internal imbalances hinder recovery.

What This Means for China’s Economy

FAI is an indicator that shows the economy’s ability to invest in the future: building infrastructure, developing industry, launching new real estate projects. Currently, it signals increasing cooling.

• The real estate sector, experiencing a liquidity crisis for several years, continues to fall.
• The manufacturing sector is slowing as demand for Chinese products both domestically and globally declines.
• Infrastructure spending is no longer a strong growth driver, indicating declining effectiveness of government stimulus.

As a result, China’s GDP growth rates are gradually decreasing. Recent trends are as follows:

• 2020: around +2.2–2.3% — lowest level in decades due to the pandemic.
• 2021: sharp recovery to +8.4–8.6%.
• 2022: slowdown to +2.9–3.1%.
• 2023: improvement to +5.2%.
• 2024: around +5.0%, matching the government’s official target.
• 2025: forecasts indicate further slowdown to +4.5–4.8%.

International organizations — IMF, World Bank, and independent research centers — agree that China’s growth potential will decline in the medium term

Causes of the Investment Slump

• Structural crisis in real estate.
• High debt levels of developers and local authorities.
• Weak domestic demand and deflation risk.
• Demographic decline affecting employment and consumption.
• Geopolitical tensions and rising protectionism limiting exports.

Forecasts suggest that by 2030, China’s economic growth may slow to around 3.35% per year — a transition from an era of high growth rates to a more stable but weak pace.

🌏 Outlook for the Coming Years

Despite difficulties, Chinese authorities still have room to maneuver: lowering reserve requirements, developer support programs, new infrastructure initiatives, and measures to stimulate consumption. Analysts believe an additional stimulus package could support a recovery in growth in 2026.

However, long-term trends look more severe. Structural problems are not solved quickly, so the economy will continue to slow even despite occasional activity spikes triggered by stimulus measures.