China’s Investment Slumped Further in November Amid Calls to Reform

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Dec 17, 2025 - 10:55 Updated: Dec 17, 2025 - 02:31
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China’s Investment Slumped Further in November Amid Calls to Reform

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China’s investment slowed further last month, while retail sales grew at the slowest pace since the regime lifted stringent pandemic restrictions, official data showed on Dec. 15, highlighting challenges Beijing faces in reforming its economic growth model.

Industrial production grew by 4.8 percent year over year in November, slower than the 4.9 percent growth seen in October, according to data released by the National Bureau of Statistics of China. It fell short of a 5 percent growth forecast by economists and marked the slowest expansion since August last year.

Retail sales, a measure of consumer spending, rose by 1.3 percent year over year, a slowdown from the 2.9 percent in October. This figure represented the worst performance since December 2022, when the world’s second-largest economy lifted its draconian COVID-19 restrictions. Economists polled by Reuters had expected a 2.8 percent increase.

“November data point to broad-based weakness in domestic activity, largely due to a pullback in fiscal spending,” Huang Zichun, China economist at Capital Economics, said in a note. “Policy support should help drive a partial recovery in the coming months, but this probably won’t prevent China’s growth from remaining weak across 2026 as a whole.”

In the first 11 months, investment in equipment, buildings, and other fixed assets outside China’s rural households contracted by 2.6 percent from the same period a year ago, according to official data. It’s worse than a 1.7 percent decline over the January through October period.

Fu Linghui, a spokesperson for the statistics bureau, told a press conference in Beijing that the 2.6 percent drop in fixed asset investment in the first 11 months was largely driven by factors such as a slowdown in property investment.

Separate data released on Dec. 15 showed the investment in real estate had plummeted by 15.9 percent over the same period, up from a 14.7 percent decline in the first 10 months.

Once accounting for a quarter of China’s gross domestic product (GDP), the property sector has been stuck in a downturn since mid-2021, eroding household wealth and weighing heavily on consumption.

Vanke, a state-backed real estate developer giant, plans to convene a second bondholder meeting later this week as it battles to avert default, according to a filing from Shanghai Clearing House. Investors had already rejected Vanke’s plan to delay repayment by a year.

The property crisis deepened further last month, with home prices across 70 major cities in China extending declines, official data showed on Dec. 15.

New home sales by value fell by 11.2 percent in the January to November period, steeper than a 9.4 percent drop recorded in the January to October period.

“The continued slide in the property market remains one of the most significant risks to China’s efforts to shift to a domestically demand-driven growth model,” Lynn Song, chief economist for Greater China at ING bank, wrote in a note.

“The wave of support in 2024 showed some promise, with prices stabilising toward the start of 2025. However, this may require continued and concerted efforts, as the downturn resumed after a few months of policy inertia.

“There remains no easy answer for ending the downturn.”

Calls for Reform

Exports have emerged as a vital engine of China’s economy amid property woes. Shipment from the East Asian nation rose by 5.9 percent in November from the same period last year, official customs data showed.
The International Monetary Fund (IMF) estimated that net exports contributed 1.1 percent to China’s 5 percent growth rate this year.
Nonetheless, analysts have voiced concerns about whether such external demand can be sustained in the coming years. A growing number of economies are seeking to impose curbs on imports from China, over fears that an influx of cheap Chinese goods could devastate their domestic manufacturing industries.

IMF Managing Director Kristalina Georgieva has called on Beijing to reduce reliance on debt-driven exports and shift to a consumption-led model.

“China is simply too big to generate much growth from exports. And continuing to depend on export-led growth risks furthering global trade tensions,” Georgieva said in her opening remarks at a briefing on Dec. 10, after concluding the fund’s regular review of China’s economy.

Among her recommendations is to adopt a comprehensive macroeconomic policy package focused on additional fiscal stimulus and further monetary policy easing.

The IMF chief also encouraged Beijing to take “more determined” and “more decisive” measures to end the persistent downturn in the property market.

“We have been actually urging more attention for closure on this program,” she told reporters. “We call them, I’m sure you know, ‘zombie firms,’ but let the zombies go away.”

The IMF estimates that fixing China’s ailing property sector within the next three years will cost the equivalent of 5 percent of GDP.

Reuters contributed to this report. 
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