BEIJING, CHINA / RankWire.AI / – In July, China experienced a deepening decline in investment, primarily driven by a sluggish property sector and reduced capital expenditure, which dampened overall domestic activity. During the first seven months of 2026, fixed-asset investment decreased by 6.7% compared to the previous year. According to the National Bureau of Statistics, the total investment excluding rural households stood at 26.03 trillion yuan. Additionally, investment in July fell by 1.42% compared to June. While retail sales and industrial output continued to grow, both indicators registered a deceleration in their annual expansion during the month.
Property development remained the primary driver of the slowdown in fixed investment, with real estate investment dropping 19.2% from January to July. Infrastructure investment declined by 3.6%, and manufacturing investment decreased by 1.7%. Private sector investment was down 9.4% year-on-year. Even when property development is excluded, the overall fixed-asset investment still fell by 3.7%, indicating that the reduced spending extended beyond the housing sector, affecting several key areas of the economy.
Consumer expenditure also showed signs of weakening in July. Retail sales increased by just 0.6% year-on-year to 3.90 trillion yuan, slowing from a 1.0% rise in June. Industrial output grew by 4.5%, a slowdown from the previous month’s 5.3%. Factory output for the first seven months increased by 5.3%. The official manufacturing purchasing managers’ index dropped to 49.2 in July from 50.3 in June, indicating a contraction as the index fell below the 50 threshold that signals economic expansion.
Property Sector’s Weakness Continues to Drive Investment Downturn
Recent months have seen a steady expansion in China’s investment decline. Fixed-asset investment contracted by 1.6% in the first four months of 2026, then by 4.1% through May. The downward trend worsened to a 5.7% decline in the first half of the year and deepened further to 6.7% through July. The housing market remains under pressure, with the floor space of newly built commercial buildings sold decreasing by 11.8%, and the total sales value dropping 13.1% to 4.27 trillion yuan over the seven-month period.
Despite the overall slowdown, certain technology-focused sectors continued to see increased investment. Investment in high-tech industries rose by 5.0% from January through July. Information services investment surged 19.2%, aerospace vehicle and equipment manufacturing grew 12.3%, and electronic and communication equipment manufacturing increased by 7.1%. Spending on intellectual property products also rose 9.1%. High-tech manufacturing output increased by 13.8%, and equipment manufacturing production grew 9.7% over the same period.
Exports Outperform Domestic Spending in Growth
Trade figures continue to show robust growth, even as investment figures soften. During the first seven months, China’s total goods imports and exports reached 30.13 trillion yuan, reflecting a 17.3% increase. Exports grew 14.0% to 17.44 trillion yuan, while imports rose 22.0% to 12.69 trillion yuan. In July, exports increased 17.8% year-on-year, and imports climbed 21.2%. Meanwhile, online retail sales of goods and services grew by 4.8% from January to July.
China’s economy expanded by 4.7% compared to the previous year in the first half of 2026. Growth slowed to 4.3% in the second quarter from 5.0% in the first. Consumer prices increased by 0.5% year-on-year in July, and the urban unemployment rate stood at 5.2%. The Communist Party Politburo called for stronger counter-cyclical adjustments and measures to stimulate domestic demand in late July. These latest figures follow weaker signals from investment, retail sales, and industrial production data.