January-February Investment Growth Turns Positive, Infrastructure Investment Demonstrates Clear Pull Effect

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Reporter Xin Yuan

The National Bureau of Statistics released data on Monday showing that from January to February 2026, nationwide fixed asset investment increased by 1.8% year-on-year, compared to a decline of 3.8% for the whole of last year.

Specifically, from January to February, infrastructure investment (excluding electricity, heat, gas, water production, and supply industries) surged by 11.4% year-on-year, reversing last year’s decline of 2.2%.

Regarding the sharp rebound in infrastructure investment growth, Wang Qing, Chief Macro Analyst at Orient Securities, told Jiemian News that this year marks the start of the “14th Five-Year Plan,” with several major projects beginning early in the year. Meanwhile, according to the government work report from the National “Two Sessions,” the local government special bonds allocated for project construction will be separately listed and increased this year.

Additionally, Wang Qing noted that the 500 billion yuan of new policy-based financial instruments issued in October last year have begun to show their boosting effect on infrastructure investment early this year. This means that the funding sources for infrastructure investment at the start of the year will be better secured. Overall, the fixed asset investment growth rate is expected to stabilize and rebound, with infrastructure investment—under the government’s strong control—potentially accelerating significantly.

The Economist Intelligence Unit’s Senior Economist Xu Tianchen told Jiemian News that on one hand, the government work report allocated 800 billion yuan for new policy financial tools, bringing incremental funds. On the other hand, over the past two years, the focus has been on debt reduction, which is now entering the second half; many provinces have “graduated” from heavy-debt lists, and restrictions on public investment are expected to loosen. Therefore, the probability of infrastructure investment growth turning positive is high.

Maintaining investment is one of China’s key economic tasks this year. The government work report clearly states that in 2026, a central budget of 755 billion yuan will be allocated for investment, along with 800 billion yuan in ultra-long-term special national bonds for “dual” construction, with differentiated increases in central investment subsidies; 800 billion yuan of new policy-based financial instruments will be issued to attract more social capital into investment.

Ruo Zhi Heng, Chief Economist and Director of the Research Institute at Yuekai Securities, told Jiemian News that the bond quota for this year remains the same as last year, balancing the needs for stable growth, debt reduction, and project reserves, continuing to play multiple roles such as stabilizing growth, optimizing structure, filling shortfalls, replacing implicit debt, and smoothing economic cycles.

Wang Qing stated in the interview that infrastructure investment growth in the first quarter still has room to rise. After the additional 800 billion yuan of new policy tools are injected later this year, infrastructure investment growth is expected to accelerate further.

In terms of real estate investment, from January to February, nationwide real estate development investment fell by 11.1% year-on-year, narrowing the decline by 6.1 percentage points compared to last year.

Data by sub-sector shows that in January-February, the sales area of new commercial housing was 92.93 million square meters, down 13.5% year-on-year, with the decline widening by 4.8 percentage points from last year. By the end of February, the pending sale area of commercial housing was 79.998 million square meters, up 0.1% year-on-year, with the growth rate slowing by 1.5 percentage points compared to the end of 2025.

“Real estate investment in the first quarter is expected to decrease by about 13.0% year-on-year, mainly due to the drag from market adjustments. Moving forward, with faster issuance of loans for ‘white list’ projects and policies aimed at stabilizing the real estate market, the adjustment will ease, and the decline in real estate investment will gradually narrow to within double digits, possibly around -8.0% for the whole year,” Wang Qing analyzed.

However, Wang Qing pointed out that there is significant downside risk to this forecast, primarily depending on whether 2026 can see a substantial reduction in residents’ mortgage rates to reverse market expectations and stimulate demand. Given that current actual mortgage rates are notably high, there is ample policy space to stabilize the real estate market and curb further declines in real estate investment.

Xu Tianchen noted that with a low base, the downward space for real estate investment is already limited, and the decline may narrow to within 5%. This year’s policy focus is on stabilizing and increasing housing prices and improving living standards, emphasizing “quality” over “quantity.”

According to the statistics bureau, in January-February, manufacturing investment increased by 3.1% year-on-year.

Regarding manufacturing performance, Wang Qing believes that manufacturing investment is mainly driven by private enterprises, and external uncertainties impacting confidence have weakened. Additionally, the 500 billion yuan of new policy financial instruments issued in October 2025 will partly be used as capital for investments in sectors like chips and biomedicine, potentially generating tangible work in January-February this year.

Wang Qing said that the government work report from the “Two Sessions” highlights “accelerating the cultivation of new growth drivers” and “speeding up high-level technological self-reliance” as the second and third key tasks, respectively. This suggests that high-tech manufacturing investments are expected to continue growing rapidly. Manufacturing investment growth in the first quarter may further accelerate.

Looking ahead to 2026, Wang Qing expects external shocks to manufacturing confidence to ease, and with continued fiscal, monetary, and industrial policies favoring the development of new productive forces, manufacturing investment could grow by around 4.0%, faster than 2025 by 3.6 percentage points, with high-tech manufacturing investment likely maintaining high growth.

Xu Tianchen, however, believes that due to ongoing profit pressures on enterprises and the deepening “anti-involution” efforts, manufacturing investment this year may remain at a low growth rate.