Chinese fixed asset investment rose 4.0 percent year-to-date in May, moderating from growth of 4.2 percent in April. In month-over-month terms, fixed asset investment fell 0.04 percent in May after dropping 0.03 percent in April.

Officials characterised monthly data published today as showing that the national economy"sustained the recovery momentum with stable growth" with"improvement in major indicators and rapid development of new growth drivers". Officials also again warned, however, that"the external environment is complex and severe" and that the domestic economy still faces"multiple difficulties and challenges". They again noted that they will seek to"frontload and effectively implement" macroeconomic policies that have already been introduced, suggesting that they do not yet see a case for a major shift in policy settings.
 
Monthly activity data published today were mixed relative to consensus expectations, with fixed asset investment growth falling short of the consensus forecast for year-to-date growth of 4.2 percent. China's RPI rose from zero to plus 7 and the RPI-P rose from zero to plus 10, indicating that recent Chinese data in sum are continuing to come in slightly on the high side of consensus ranges.

Fixed asset investment for the year-to-date to April is expected to hold at 4.2 percent growth. March's 4.2 percent rate missed expectations for 4.7 percent.

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.