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<\/p>\nChina\u2019s 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.<\/p>\n
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According to the latest data<\/a> 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.<\/p>\n Based on cumulative figures, China\u2019s FAI in October fell 12% to 3.74 trillion yuan from\u00a04.25 trillion yuan in the same period last year.\u00a0All 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%.<\/p>\n Residential property development investment decreased<\/a> 13.8% year-on-year to 5.66 trillion yuan in the first ten months.\u00a0In October alone, the figure dropped\u00a019.4% to\u00a0454.9 billion yuan from a year earlier, highlighting the deepening drag from the ongoing property correction.<\/p>\n \u201cExcluding real estate, China\u2019s FAI grew 1.7% in the first 10 months from the same period of last year,\u201d NBS spokesperson Fu Linghui said<\/a> at a media briefing on Friday.\u00a0\u201cThe 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.\u201d\u00a0<\/p>\n He said the public should view the recent changes in investment growth comprehensively.<\/p>\n \u201cWe should not focus solely on current conditions, but adopt a forward-looking perspective. As the world\u2019s largest developing country, China still has vast investment potential as it works toward achieving the level of a moderately developed nation,\u201d he stressed.\u00a0<\/p>\n Fu said investment in the manufacturing sector\u00a0rose 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%.<\/p>\n \u201cWhat we\u2019re seeing is further evidence that the world\u2019s second\u2011largest economy is entering the final quarter on a weakening trajectory,\u201d\u00a0analysts at Cboe Global Markets<\/a>,\u00a0a Chicago-based financial exchange operator, write in a research note.\u00a0<\/p>\n They write that the sharper\u2011than\u2011expected slowdown in investment aligns with softer industrial output and sluggish household consumption.<\/p>\n \u201cThe latest figures underscore how vulnerable China remains to swings in both domestic demand and external conditions,\u201d they say. \u201cThe export contraction earlier this year was a reminder of how quickly sentiment can shift, and how important it is for policymakers to stabilize expectations.\u201d<\/p>\n Analysts note that global market investors are increasingly seeking clearer guidance on Beijing\u2019s next steps, particularly how authorities plan to balance deeper structural reforms with short\u2011term stabilization. However, it seems that policymakers are unwilling to deploy large\u2011scale stimulus for now and are instead prioritizing steady, consistent implementation of existing measures.<\/p>\n Downward spiral<\/p>\n Since the Evergrande Group debt crisis erupted in mid\u20112020, China\u2019s 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.<\/p>\n 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.<\/p>\n NBS data revealed<\/a> that home prices in the 70 largest Chinese cities\u2019 secondary markets showed broadening weakness. In October, home prices in first\u2011tier cities fell 4.4% year\u2011on\u2011year, with Beijing down 4.7%, Shanghai 3.4%, Guangzhou 6.4% and Shenzhen 3.3%. Second\u2011tier cities recorded a 5.2% decline, while third\u2011tier cities saw a 5.7% drop.<\/p>\n \u201cOver the next three years, housing prices may undergo further adjustments, with some regions potentially hitting historic lows,\u201d said Li Daokui,\u00a0a professor at Tsinghua University\u2019s School of Economics and Management. \u201cThis is an inevitable part of the market returning to rationality.\u201d<\/p>\n \u201cFor homebuyers, those with genuine housing needs should focus on the fundamentals of livability and avoid areas burdened by high inventory or population outflows,\u201d he said. \u201cHighly leveraged households should restructure their debt and strengthen emergency reserves.\u201d<\/p>\n \u201cSmaller cities with high inventory are still under strong downward pressure, as property developers are cutting prices to push year\u2011end sales,\u201d said<\/a> Zhang Bo, head of 58 Anjuke Research Institute.\u00a0\u201cPrices\u00a0remain stable at prime sites in tier\u20111 cities, but are diverging in tier\u20112 cities. In tier\u20113 and tier\u20114 cities, prices are under heavy pressure.\u201d\u00a0<\/p>\n \u201cThe 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\u2011led growth model,\u201d said\u00a0Li Yujia, chief researcher at the Guangdong Housing Policy Research Center. \u201cAfter four years of contraction, the market has fallen to levels last seen in 2009, which suggests we are entering a bottoming phase.\u201d<\/p>\n 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.<\/p>\n Consumption and job markets<\/p>\n Some Chinese commentators are issuing sharper warnings about the market\u2019s trajectory, urging homeowners to brace for deeper declines.<\/p>\n \u201cWith over 70% of household wealth tied to property, falling home prices directly erode family balance sheets,\u201d says<\/a> a Guangdong-based columnist using the pseudonym \u201cWeiyang Kandian.\u201d\u00a0<\/p>\n \u201cA Hangzhou family bought a home for 5 million yuan, now worth 3.5 million, yet still owes 3.8 million on the mortgage,\u201d he says. \u201cIn Wuhan, a homebuyer lost\u00a0the entire down payment as his 1.6\u2011million\u2011yuan flat is only worth 1.1 million yuan. These negative\u2011equity positions don\u2019t just drain savings, but also crush confidence.\u201d<\/p>\n \u201cSurveys show that these families\u2019 consumption falls by up to 37%, far more than other households,\u201d he noted. \u201cLower 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.\u201d<\/p>\n \u201cWhen spending slows, restaurants, tourism agencies and entertainment premises cut headcounts,\u201d says<\/a>\u00a0a Shandong-based columnist writing under the pen name Fanchen Moke. \u201cJob security weakens first in customer-facing industries, where margins are thin and demand falls fast.\u201d\u00a0\u00a0<\/p>\n \u201cAs 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,\u201d he writes.<\/p>\n Read: Chinese pundits claim victory after Trump\u2019s trade concessions<\/a><\/p>\n Follow Jeff Pao on Twitter at\u00a0@jeffpao3<\/a><\/p>\n \t