A sharp acceleration in infrastructure spending has emerged as a key pillar of China's investment stabilization drive, offsetting a persistent decline in the property sector and helping overall investment return to positive growth in the first quarter, officials and economists said.

The rebound came after authorities vowed late last year to halt the investment downturn, following a 3.8 percent contraction in fixed-asset investment in 2025.

According to the National Bureau of Statistics, fixed-asset investment reached 10.27 trillion yuan ($1.51 trillion) in the first quarter, up 1.7 percent year-on-year. Beneath the headline figure, however, lies a sharp divergence. Infrastructure investment surged 8.9 percent, while property development investment plunged 11.2 percent.

Wang Qing, chief macroeconomic analyst at Golden Credit Rating International, said that infrastructure investment — the area where the government has the most direct leverage — has ramped up significantly at the start of the year.

"The pace of growth in the first quarter exceeded what the market had anticipated," Wang said.

China has not disclosed the scale of its infrastructure investment in recent years. However, a report by China Galaxy Securities suggests that the proportion of infrastructure investment within total fixed-asset investment has been rising, estimating it at about 45.3 percent as of end-2023.

Last year, the sector faced significant headwinds. Due to a combination of fiscal constraints and a high base of comparison, infrastructure investment saw a rare year-on-year decline of 2.2 percent for the full year, according to the bureau.

Luo Zhiheng, chief economist at Yuekai Securities, said the robust first-quarter growth accelerated by 8.3 percentage points from the full-year 2025 level and contributed 2.7 percentage points to overall investment growth.

"Infrastructure spending countered the drag from the prolonged property downturn and served as the key factor behind the turnaround from negative growth last year," Luo said.

As 2026 is the inaugural year of the 15th Five-Year Plan (2026-30),"Local governments have strong incentives to create economic activities in the first year to set the foundation for the next five years of development."

The NBS said that in the first quarter, investment in projects with planned total investment of 100 million yuan or more rose 4.5 percent year-on-year, indicating that large-scale construction is accelerating.

Funding has followed the projects. Luo said fiscal resources were deployed early and aggressively in the first quarter.

Public bond issuance data show that in the first quarter, local governments issued about 3.1 trillion yuan in bonds, an increase of about 9.3 percent from the same period last year. Newly issued special bonds directly tied to infrastructure project construction reached about 1.2 trillion yuan, up about 25 percent year-on-year.

The shift is not just about spending more — it is about spending differently, according to analysts.

While traditional rail, road and airport projects remain important, new infrastructure areas including computing centers, 5G and 6G networks, electric vehicle charging piles, and low-altitude flight infrastructure are becoming the new growth drivers, said Wen Bin, chief economist at China Minsheng Bank.

"The government is using infrastructure investment not just to stabilize growth in the short term, but to shape China's transition to a digital, green and innovation-driven economy for the future," Wen said.

Entering the second quarter, with the peak of project launches coming to an end and special bond issuances normalizing, Luo cautioned that infrastructure growth may slow marginally.

"Local governments face a dual squeeze from debt servicing and falling land income. Whether infrastructure can continue to play its role as a ballast for investment will depend on policy support from the central level."

wangkeju@chinadaily.com.cn