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China’s investment fell for the third straight month in November, official data showed, just days after President Xi Jinping called on officials to reverse a decline that threatens to undermine growth in the world’s second-largest economy.
Fixed asset investment for the year to date to November 30 declined 2.6 per cent on a year earlier, a steeper fall than the 2.3 per cent decline forecast by a Bloomberg survey of analysts and October’s fall of 1.7 per cent.
The decline is expected to drive calls from China’s top leadership to “stabilise” investment in an economy that for decades has relied heavily on state financing for growth, particularly in infrastructure and property as well as high-end manufacturing.
Last week, the central economic work conference, the Communist party’s top meeting on the economy presided over by Xi, said “China will work to stabilise and revive investment, [and] appropriately increase the scale of investment within the central government budget”.
Analysts believe this was the first official acknowledgment from China’s leadership of the investment slowdown.
Last month’s retail sales growth, meanwhile, was the weakest in three years, reflecting flagging domestic consumption and low household confidence amid a property sector slowdown now entering its fifth year.
The IMF last week called on Beijing to take stronger measures to stimulate domestic demand and reflate its economy, which has suffered persistent deflation.
Goldman Sachs analysts estimated that about 60 per cent of the falls in fixed asset investment up until October was due to statistical corrections of previously over-reported data.
But they said that 40 per cent of the decline could be attributed to the property market slowdown, infrastructure-related fiscal spending and Beijing’s “anti-involution” policies. These are measures by the top leadership to rein in sectors with severe price competition, which economists say is usually caused by overcapacity.
The National Bureau of Statistics also reported on Monday that retail sales grew 1.3 per cent last month on a year earlier, the slowest pace of growth since December 2022 and short of Bloomberg’s analyst forecasts of 2.9 per cent, which would have been in line with October’s figure.
Industrial production rose 4.8 per cent year on year, trailing analyst forecasts of 5 per cent growth and October’s rate of 4.9 per cent.
“November activity data broadly missed market expectations, especially for retail sales,” Goldman Sachs said in an analyst note. It said fixed asset investment growth “remained depressed”, with a year-on-year decline of 10.7 per cent in November on a single-month basis against 11.4 per cent in October.
But Goldman Sachs cautioned against over-interpreting the slump, as “recent study suggests that the NBS statistical correction of previously over-reported data has played at least as large a role as fundamental factors”.
Unlike other major economies, China does not publish full quarterly breakdowns of GDP under what is known as the expenditure approach, which include investment, consumption and net exports.
Instead, it publishes its own monthly data series, such as fixed asset investment and retail sales, which are closely watched in the absence of more detailed GDP data.
Since 2018, the statistics bureau has also stopped reporting sectoral breakdowns of fixed asset investment by value, leaving only growth rates across different sectors.
Chinese authorities have set a full-year growth target of about 5 per cent for 2025. In the third quarter, data showed the economy expanded 4.8 per cent, the slowest pace in a year. Economists expect China to hit the 5 per cent target this year.