Chinese fixed asset investment rose 4.0 percent year-to-date in May, slowing from growth of 4.7 percent in April and below the consensus forecast of 4.4 percent. This reduction in year-over-year growth partly reflects a smaller base effect from the impact of strict lockdowns in Beijing and Shanghai last year. Fixed asset investment fell sharply on the month in April 2022 and then rebounded in May 2022, impacting year-over-year growth rates for April and May 2023.

Investment in infrastructure rose 7.5 percent on the year after a previous increase of 8.5 percent, while manufacturing investment rose 6.0 percent after a previous increase of 6.4 percent. Property investment fell 7.2 percent after dropping 6.2 percent previously. In month-over-month terms, fixed asset investment rose 0.11 percent in May after falling 0.64 percent in April.

Today's run of data fell short of expectations, resulting in a fall in the China ECDI from 7 to minus 50 and the ECDI-P from 20 to minus 60, indicating that data are underperforming market expectations.

Fixed asset investment in May is expected to rise 4.4 percent. This would compare with percent 4.7 growth in April which was higher than expected.

Investment in fixed assets refers to the investment in construction and purchase of fixed assets by private and state-controlled domestic enterprises and households (excluding rural households) involving a total planned investment of CNY5 million yuan or more. Separate data for private investment and state-controlled investment are published as well as more detailed data on an industry basis.

Investment in fixed assets is an important part of gross domestic product and also provides the additional productive capacity to an economy that is required to drive future growth. Strong growth in this category of spending indicates that enterprises are confident about future prospects and is generally associated with rising employment and incomes.

Investment in fixed assets therefore provides information about near-term and future economic growth. Investors need to closely track the economic growth because it usually dictates how investments will perform. Investors in the stock market like to see healthy economic growth because robust business activity translates to higher corporate profits. Bond investors are more highly sensitive to inflation and robust economic activity could potentially pave the road to inflation. By tracking economic data such as GDP, investors will know what the economic backdrop is for these markets and their portfolios.