How to view the current investment downturn: taking the pulse of the conversion of old and new driving forces

For some time, all parties have paid close attention to investment data and investment trends. From January to August this year, national fixed asset investment (excluding rural households) fell by 7.2% year-on-year, causing some concerns and concerns. To look at the current decline in investment, we need to look at both numerical changes and structural changes. We need to understand the reasons and grasp the trends. It is necessary to use data representation to distinguish which decline is the inevitable result of the adjustment of old kinetic energy, and which growth represents the vigorous rise of new kinetic energy, objectively understand and grasp the inherent mechanism of the conversion of old and new kinetic energy, and enhance confidence in the prospects of high-quality development.

View changes in investment growth model rationally

The current downward trend in investment growth reflects that my country's investment momentum structure is undergoing a historic adjustment. The "three pillars" of real estate, traditional infrastructure, and traditional manufacturing that supported rapid investment growth in the past have entered a period of adjustment: real estate development investment dropped from 14.76 trillion yuan in 2021 to 8.28 trillion yuan in 2025, a decrease of about 44%. From January to August 2026, real estate development investment fell by 19.9% year-on-year. During the period, the growth of transportation investment slowed down significantly, and investment in municipal public facilities showed negative growth. From January to August 2026, infrastructure investment fell by 4.0% year-on-year. The continuous expansion of traditional manufacturing industry in the early stage has formed a high production capacity base, and the capacity utilization rate declined during the "14th Five-Year Plan" period. From January to August 2026, manufacturing investment fell by 2.3% year-on-year.

The fundamental reason for the decline of the old driving force of investment is that after entering the switching stage of development driving force, the original investment growth model is no longer sustainable. Real estate investment is still in a stage of deep adjustment. The era of stock housing has arrived, and the past expansion model of large-scale land acquisition and large-scale new construction has ended. After years of large-scale construction of traditional infrastructure, the skeleton of transportation, energy and other hardware infrastructure has basically taken shape. The space for large-scale construction has narrowed. Coupled with the strengthening of local financial constraints, the growth rate has dropped significantly. The production capacity of some traditional manufacturing industries has become saturated, and the willingness of enterprises to expand production has shrunk. We must have a clear understanding of this fundamental change, and there is no need to avoid or deny it.

What needs to be noted at the same time is that the structural highlights in the investment field are equally clear, and investment in new driving forces has maintained rapid growth. From January to August 2026, investment in high-tech industries increased by 5.2% year-on-year, with the growth rate accelerating for three consecutive months, of which investment in the information services industry increased by 22.7%; investment in intellectual property products increased by 9.2%, accounting for 15.2% of all investment, 2.3 percentage points higher than the same period last year; investment in the purchase of equipment and tools increased by 9.3%, accounting for 19.5%; investment in the information transmission industry increased by 28.4%. It is a definite trend for investment to shift from focusing on scale expansion to focusing more on technological innovation, industrial upgrading and basic support.

But we must also clearly realize that the current volume of new kinetic energy is not enough to completely offset the contraction of old kinetic energy. In the investment structure, high-tech industry investment accounts for less than 11%, while real estate and infrastructure investment account for nearly 50%. Looking at individual projects, traditional fields rely more on land, factories and large-scale projects, often with large investment amounts, while new kinetic energy relies more on intangible asset investment, and project investment is relatively limited. Therefore, although the new kinetic energy is growing faster, the increase is not enough to fill the gap left by the old kinetic energy.

To understand the true picture of new and old driving forces, we must also pay attention to the expansion of the connotation and extension of investment. Traditional fixed asset investment statistics take projects as the object of investigation, follow the principle of local projects, and focus on tangible assets. However, new investments such as R&D, software, and data are dispersed in daily operations of enterprises, making it difficult to collect and measure. The national level has established a statistical monitoring system for intellectual property product investment and released it on a monthly basis, but normalized statistics by region have not yet been fully established, and innovation investments in some places are not fully reflected in local investment statistics. Human capital expenditures such as education, training, and health are mostly included in consumption under the current national economic accounting framework and are not reflected as investment. This difference in caliber will, to a certain extent, amplify the intuitive feeling of the gap between the old and new kinetic energy.

Dialectically grasp the relationship between new and old driving forces of investment

When looking at the relationship between old and new driving forces for investment, we must first get rid of two cognitive misunderstandings: one is sticking to the old path and ensuring that investment is simply equivalent to continuing to make great efforts in real estate and traditional fields; the other is one-sided "loving the new and hating the old", completely equating old driving forces with backward production capacity, and believing that the conversion of old and new driving forces is an either-or replacement relationship of "breaking the old and building the new". In fact, the old and new kinetic energy is not a binary opposition, but an organic whole that coexists and transforms into each other. The essence of transformation is to improve the existing situation and increase empowerment, rather than reinventing the wheel.

Old kinetic energy is not synonymous with backwardness and still has huge room for practical contribution and transformation and upgrading. Real estate, traditional infrastructure, and traditional manufacturing are still the fundamentals of my country's real economy, carrying a huge industrial chain, supply chain, and jobs. Traditional infrastructure is shifting from large-scale new construction to strengthening shortcomings, strengthening weaknesses, and improving quality and efficiency. There is still considerable room for urban renewal, water conservancy projects, and disaster prevention and reduction system construction. The construction of "six networks" has also attracted great attention from all parties. Through equipment updates, digital transformation, and green transformation, traditional manufacturing industries can transform into an important carrier of new momentum. Since the implementation of the large-scale equipment renewal policy, investment in the purchase of equipment and tools has continued to grow rapidly, which is a direct reflection of the "transformation to new" of traditional industries. The focus of the real estate sector is also shifting from expansionary development to meeting the needs for affordable and improved housing. The transformation of old driving forces is not a simple reduction in scale, but a shift from scale expansion to quality improvement.

The growth of new kinetic energy follows objective laws, and it takes time to grow in size. There is a long cultivation cycle from technological breakthroughs and laboratory results to industrialization and large-scale investment. Intangible assets have long investment return cycles and high uncertainty, making it difficult to generate physical engineering volume as quickly as building a factory. Even for tracks that have achieved technological breakthroughs, they still need to repeatedly iterate processes and cultivate market scenarios. In 2025, my country's total social R&D expenditure will reach 3.9 trillion yuan, and the investment intensity will reach 2.8%, exceeding the average level of OECD countries for the first time. The achievements are hard-won, but it still needs continuous accumulation to transform it into large-scale industrial investment and comprehensively offset the shrinkage of traditional fields.

There is also a close transformation mechanism between old and new kinetic energy. Increment can drive the stock, and the stock can also feed the increase. On the one hand, new investments such as artificial intelligence, industrial software, and big data are widely used in traditional industries such as steel, chemicals, and equipment to transform production processes, improve efficiency, and drive "renovation" with "innovation." On the other hand, traditional industries are the most important application markets for high-end equipment, new materials, and industrial software. Without huge scenario demand, many emerging technologies lack the soil for iterative polishing. It should also be noted that new kinetic energy will also be iteratively updated internally, and today's new industries may also become stocks that need to be transformed and improved in the future. "New" and "old" are dynamic concepts relative to the development stage, rather than immutable labels.

Promote the smooth transition between old and new driving forces

Facing the realistic challenges of investment in the transition period between old and new driving forces, we must not only see the dawn of new driving forces and avoid being overly pessimistic and overly anxious about traditional data, but also face the fact that the conversion of driving forces cannot be achieved overnight and maintain sufficient strategic patience.

The first is to revitalize and improve the stock. Rather than simply compressing reasonable investment needs in traditional fields, the focus should shift from scale expansion to stock upgrading. Implement large-scale equipment updates and consumer goods trade-in policies, and support traditional manufacturing industries in carrying out intelligent, green, and digital transformation. Promote the implementation of major "double" construction projects and continue to promote project construction in the fields of water conservancy, disaster prevention and reduction, and urban renewal. Based on the new model of real estate development, we will increase efforts in the renovation and construction of affordable housing and urban villages. For cities that meet the conditions, we can consider moderately relaxing the area ratio and density standards in accordance with livable requirements. At the same time, we will strengthen project management, resolutely curb inefficient and ineffective investments, and prevent blindly paving the way for projects to meet numbers.

The second is to cultivate and expand incremental growth. Develop new productive forces according to local conditions, increase investment support for advanced equipment manufacturing, digital economy, green and low-carbon and future industries, and encourage enterprises to expand investment in intangible assets such as R&D, software, and data assets. Give full play to the role of government investment in leveraging, invest more government funds in key technology research and innovation platform construction, and actively open new technology application scenarios to social capital. Improve the multi-level science and technology financial system, develop venture capital and patient capital, and improve the intellectual property pledge financing mechanism in response to the characteristics of long investment cycles, high risks, and lack of physical collateral for intangible assets. Give full play to the advantages of the ultra-large market, use application-driven technology iterations, promote innovation results from the laboratory to industrialization, and continue to increase the amount of investment in new driving forces.

The third is to make up for the shortcomings of the system. Deepen the reform of national economic accounting, promote the extension of intellectual property product investment statistics to local areas, and gradually establish a regional intangible assets investment monitoring system. Break away from the inertia of only looking at the growth rate of fixed investment, and incorporate indicators such as human capital accumulation, intangible asset growth, and innovation investment intensity into the high-quality development performance evaluation system to change the situation in which "investment in things is visible and investment in people is invisible." In view of the characteristics of high uncertainty and long cycle of intangible asset investment, establish a review, supervision and assessment system that is different from that of engineering projects, allow trial and error, inclusive exploration, and avoid treating R&D and innovation projects with the rigid management model of infrastructure projects. At the planning level, make strategic arrangements for vocational skills training, integration of industry and education, and public health capacity building, and promote the simultaneous planning and coordinated advancement of "investing in people" and "investing in things."

The fourth is to optimize the development environment. In the conversion of old and new driving forces, private investment must play a greater role. At present, the investment confidence of micro entities still needs to be restored. It is necessary to continue to optimize the business environment, implement various policies to promote the development and growth of the private economy, break down market access barriers, and ensure that all types of business entities participate in fair competition. It is necessary to stabilize market expectations, improve property rights protection and intellectual property protection systems, enhance corporate confidence in long-term operations, and guide private capital to not only participate in the upgrading of traditional industries, but also actively participate in emerging tracks. It is necessary to strengthen macro-policy coordination, make economic policies and non-economic policies work in the same direction, avoid the fallacy of synthesis, and create a stable macro environment for the conversion of old and new driving forces.

Author: Dong Yu, Executive Vice President of China Development Planning Institute of Tsinghua University, Vice President of China Private Economy Research Association

("Sanlihe" Studio)