China's 2024 Economic Investments: FAI Grows 3.2% Amid Property Market Struggles
On January 19, 2025, the National Bureau of Statistics of China released its latest figures for the country’s fixed asset investment, showing an overall growth of 3.2% in 2024. This brought the total FAI for the year to Yuan 51.44 trillion ($7.02 trillion), reflecting a steady investment trend across key sectors. However, despite this overall positive growth, the property sector continued to struggle, with investments falling sharply by 10.6% to Yuan 10.03 trillion.
Fixed Asset Investment Breakdown
China’s FAI encompasses investments in infrastructure, property, and industrial sectors, and 2024's performance provides a clear picture of the shifting priorities and challenges within the country’s economy.
1. Total Fixed Asset Investment:
o Growth: The total FAI grew by 3.2% in 2024, signaling continued investment in infrastructure, industrial, and service sectors.
o Total Investment: The total FAI amounted to Yuan 51.44 trillion ($7.02 trillion), reflecting ongoing efforts to strengthen the country’s infrastructure and industrial sectors.
2. Private Enterprises' Contribution:
o The contribution of privately-owned enterprises to FAI dropped by 0.1% compared to 2023, totaling Yuan 25.76 trillion.
o Private Enterprises' Share: This accounted for 50.08% of the total FAI, indicating a slight decline in private sector involvement in large-scale investment projects.
3. Sector-Specific Investments:
o Tertiary Sector (Services): The tertiary sector remained the largest recipient of investment, totaling Yuan 32.58 trillion. However, the funding in this sector was down by 1.1% compared to the previous year.
Infrastructure Investment: Notably, infrastructure construction grew by 4.4%, showing that public infrastructure projects continued to receive strong backing.
o Industrial and Agricultural Sectors: Data on industrial and agricultural sector investments shows a steady performance with ongoing support for manufacturing and infrastructure projects.
The Struggling Property Market
The property sector was a significant area of concern for China’s economy in 2024, with both investment and sales seeing substantial declines. The downturn in the property market has been one of the most pronounced trends, heavily influencing China’s overall economic performance in the past year.
1. Investment in Property:
o Total Investment: Investment in the property market, including residential and commercial real estate, was Yuan 10.03 trillion in 2024, a 10.6% decrease from the previous year.
o Residential Housing: Of this total, Yuan 7.6 trillion was allocated to residential housing projects, marking a 10.5% decline in investment compared to 2023.
2. Property Launches:
o The total area of newly-launched property projects fell by 23% year-on-year to 738.93 million sq m. This decline was mirrored by residential housing projects, which also decreased by 23% to 536.6 million sq m.
o This drop in new property launches reflects the broader challenges in the housing market, including declining demand, stricter regulations, and concerns over financial stability.
3. Property Sales:
o Sales Volume: Property sales by floor area for the full year decreased by 12.9% to 973.85 million sq m, with residential sales seeing a 14.1% drop.
o Regional Performance: The East China region led in terms of property sales, with a total of 450.55 million sq m sold. However, sales in this region were also down by 12.7% year-on-year.
4. Property Market Inventory:
o Inventories: As of December 2024, property inventories in China stood at 753.27 million sq m, reflecting a 10.6% increase compared to 2023.
o Property Climate Index: The property market climate index showed signs of stabilization, improving for seven consecutive months to reach 92.78, slightly up from 92.62 in November 2024. Although still in the negative zone, this improvement hints at a potential slowdown in the rate of decline.
Government Policies and the Real Estate Market
The decline in property market performance is largely attributed to tightened regulations and restrictions on property developers, particularly after the government’s efforts to curb excessive borrowing and speculative investment in real estate. These regulatory measures were aimed at stabilizing the housing market and reducing financial risks, but they have also dampened investor confidence and slowed down market activity.
The Chinese government’s recent economic strategies have focused on rebalancing growth, with increasing emphasis on infrastructure, technology development, and environmental sustainability. However, the property sector remains a complex issue, as it is a key driver of economic activity in many regions.
Outlook for the Property Sector in 2025
Looking ahead, the property market in China is expected to face ongoing challenges in the short term. While government measures are designed to stabilize the market, the overhang of excess housing supply and tight credit conditions may continue to weigh on growth in this sector.
Nonetheless, the overall FAI growth of 3.2% and the continuing strength of infrastructure investment suggest that China’s economy remains on a steady path to recovery, with the property sector likely to see gradual improvement in the longer term, especially as government support for the sector continues.
