China’s listed manufacturers are increasingly putting their money into financial assets such as stocks and bonds rather than investing in their own businesses, as the potential returns from capital expenditure wane. The fall in investment by industrial groups is weighing on China’s economy at a time when it is facing a severe slowdown, growing at a 30-year low of 6 percent in the third quarter.

Manufacturers listed in mainland China increased their investments in financial products by nearly one-third in the first 10 months of this year compared with full-year 2018 to Rmb2.5tn ($353bn), according to East Money Information, a financial data provider.

Meanwhile, across all industrial firms both listed and unlisted, growth in investment in their own businesses fell to a record low of 2.5 percent in the first three quarters of this year, down from 9.5 per cent for full-year 2018, official data show. he wealth management products, which include bonds, stocks, instruments based on market indices and private equity and hedge funds, are being sold by banks and brokerages as well as shadow banking entities ranging from trust companies to private investment firms.

The investment boom in financial products –   which offer average yields of about 4 per cent – is an indication that manufacturers are facing falling returns from pursuing their core businesses. China’s textile industry, for instance, reported a return on assets of only 2.3 per cent last year.