Chinese fixed asset investment rose 3.4 percent year-to-date in July after growth of 3.8 percent in June, below the consensus forecast for an increase of 3.8 percent. Manufacturing investment increased 5.7 percent year-to-date in July, down from 6.0 percent in June, while property investment fell 8.5 percent year-to-date after a previous decline of 7.9 percent. In month-over-month terms investment fell 0.02 percent after increasing 0.39 percent previously.

Fixed asset investment and other key activity data published today show weaker year-over-year growth and near-zero month-over-month growth in July. This further loss of momentum in China's economic recovery is in line with PMI survey data and the assessment of senior China's leadership that the economy is facing"difficulties and challenges". Along with weak inflation data published last week, today's activity data may strengthen the case for some policy measures to support stronger demand.

With today's activity data weaker than expected, the China ECDI has fallen from 14 to minus 71 and the ECDI-P has dropped from 20 to minus 100, indicating that recent Chinese data in sum are now coming in far below consensus forecasts after recent outperformance.

Fixed asset investment in July is expected to rise 3.8 percent. This would match 3.8 percent growth in June against expectations at the time for 3.5 percent and against 4.0 percent growth in May.

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.