context: Beijing is still undergoing the painful economic transition from low-end manufacturing and its real estate-driven model to an advanced manufacturing and service-oriented model. The state swings back and forth between old and new growth drivers, reflecting the conundrum between securing sustained growth and pursuing an uncertain future of economic upgrades.

Although affected by the pandemic, NBS (National Bureau of Statistics) data show higher than expected improvement in October industrial added value and consumption. However, investments in real estate and infrastructure are still lagging. To stabilise growth, analysts emphasise the importance of strengthening investment.

The real estate sector is the greatest source of uncertainty, says Zhu He 朱鹤 CF40. Given export and real estate are two important pillars of growth, and exports are unlikely to improve in the short term, Zhu cautions too great a decline in real estate investment. He emphasises that the key is to help property developers avoid liquidity crises, relax purchasing restrictions and ensure long-term policy stability.

Property development investment grew by 7.2 percent in January-October, dropping by 1.6 percentage points compared to the first 9-month data y-o-y. This is the biggest drop among all three investment categories. Regulators continued to tighten their grip on the real estate market, albeit with weaker implementation intensity, says Wang Jingwen 王静文 Pangoal Research Institute. But consumers are getting more pessimistic and risk-averse, while property developers encounter liquidity problems more frequently.

Infrastructure investment increased by 1.0 percent in January-October, dropping 0.5 percentage points compared to the same 9-month data y-oy. This trend is related to slack real estate development. As property developers are slow to acquire land, says Wu Ge 伍戈 Changjiang Securities, local governments are financially constrained to expand infrastructure construction. Sun Yongle 孙永乐 Hongta Securities argues that weak infrastructure growth is due to the lack of good projects that qualify for the special-purpose bond usage.

Manufacturing investment grew by 14.2 percent in January-October, 0.6 percentage points lower than the 9-month data y-o-y. This trend is generally good, and the structure is trending towards hi-tech industries, says Wen Bin 温彬 Minsheng Bank.