China’s fixed-asset investment (FAI) rose by 4% year-on-year in the January–April 2025 period, falling short of market expectations for a 4.2% increase and signaling lingering softness in capital spending despite government efforts to stabilize growth.
China fixed investment growth below forecasts
The data reflects a continued divergence across sectors, with strength in manufacturing and infrastructure partially offset by a persistent drag from the real estate sector.
Infrastructure investment grew by 5.8% during the four-month period, supported by accelerated project approvals and increased fiscal spending on transport, water conservancy, and urban development. This follows Beijing’s ongoing push to bolster infrastructure as a countercyclical tool amid a fragile domestic recovery. Manufacturing investment remained robust, rising by 8.8%, thanks to increased spending in high-tech industries such as electronics, green energy equipment, and advanced machinery. This underscores China’s longer-term goal of upgrading its industrial base and improving self-reliance in strategic sectors.
However, the real estate sector continued to weigh heavily on overall investment. Property investment plunged by 10.3% year-on-year, extending a multi-month downturn driven by weak demand, tight financing conditions, and lingering concerns over developer defaults. Home sales and new construction starts also remained subdued, suggesting limited near-term recovery in the sector despite some recent policy easing at the local level.
Investment in the primary sector up by double digits
By industry classification, investment in the primary sector (agriculture and resource extraction) surged by 13.2%, reflecting improved agricultural infrastructure and rural revitalization projects. The secondary industry (including manufacturing and construction) posted a solid 11.7% gain, highlighting continued momentum in industrial activity. In contrast, the tertiary industry—which encompasses services such as retail, finance, and real estate—slipped by 0.2%, suggesting that the services sector is struggling to gain traction amid weak consumer confidence and tepid household spending.
Excluding the property sector, fixed-asset investment grew by a much stronger 8% in the first four months of the year, emphasizing the drag that real estate continues to exert on the broader economy. On a month-on-month basis, fixed-asset investment rose by just 0.10% in April, indicating a deceleration from earlier months and reinforcing concerns that the investment recovery may be losing steam.
Looking ahead, policymakers are likely to maintain accommodative policies, including targeted credit support and selective fiscal stimulus, to sustain investment growth. However, analysts caution that without a meaningful rebound in the housing sector and stronger consumer demand, the recovery in overall fixed-asset investment could remain uneven and vulnerable to external shocks.
