China's annual fixed asset investment dropped by 3.8% year-on-year in 2025, marking one of the sharpest declines in decades, according to ANZ's senior economist Yeung. The contraction signals deepening weakness in infrastructure and real estate, fueling concerns over global demand and commodity markets.
- China’s fixed asset investment declined 3.8% year-on-year in 2025, one of the worst drops in recent history.
- Private-sector investment contracted 6.1%, signaling weak business sentiment and credit constraints.
- CSI300 fell 2.4%, SPX dipped 0.7%, and CNH weakened to 7.32/USD amid risk-off sentiment.
- Commodity demand from China is under pressure, pushing gold (XAU) up 1.2% and impacting AUD and industrial equities.
- Q1 2026 industrial output forecast revised to -5.2%, up from prior estimates of -3.4%.
- Global exporters and real estate firms face downward revisions in 2026 outlooks due to Chinese demand slowdown.
China’s fixed asset investment fell 3.8% in 2025, the steepest annual decline since the early 2000s, according to a recent assessment by ANZ’s Yeung. The figure, falling well below expectations and previous years’ modest growth, reflects persistent underinvestment in infrastructure and a continued downturn in residential construction. The decline is particularly pronounced in private-sector projects, which contracted by 6.1%, highlighting weak business confidence and tight credit conditions. The deterioration in investment activity has significant ripple effects across global markets. Commodity exporters, especially those supplying steel, copper, and cement, face diminished demand from China, the world’s largest buyer. Industrial equities globally have reacted with losses, as investors reassess supply chain resilience and end-market demand. The CSI300 index closed down 2.4% on the news, while the SPX saw a 0.7% dip, reflecting broader risk aversion. Currency markets also shifted, with the CNH weakening to 7.32 per USD, its lowest level since late 2023. The Australian dollar (AUD) dropped 0.9% against the USD as commodity-linked exporters face lower Chinese demand, while gold (XAU) rose 1.2% as safe-haven flows intensified. Analysts now project a 5.2% contraction in China’s industrial output for Q1 2026, higher than the 3.4% decline assumed in current macro models. The implications extend beyond China’s borders. Exporters in Southeast Asia and Latin America, dependent on Chinese manufacturing inputs and final goods demand, face earnings pressures. Real estate firms in Hong Kong and the mainland saw share prices fall by an average of 8.5%, while industrial manufacturers tied to Chinese construction projects reported revised guidance for 2026, cutting capital expenditure plans by 15–20%.