Chinese fixed asset investment rose 3.4 percent year-to-date in August, moderating from growth of 3.6 percent in July for the lowest growth rate of the year. In month-over-month terms, fixed asset investment increased 0.16 percent after falling 0.17 percent previously.

Officials characterised the monthly data published today as showing that"the national economy maintained stability in general while making steady progress", broadly in line with comments made in recent months. However, they also cautioned that"the adverse impacts arising from the changes in the external environment are increasing, effective demands remain insufficient at home, and the sustained economic recovery is still confronted with multiple difficulties and challenges". Officials, however, provided little guidance about whether changes to policy settings will be considered in the near-term.

Data published today were slightly weaker than consensus expectations. The China's RPI and RPI-P fell from minus 43 and minus 40 to minus 64 and minus 70 respectively, indicating that recent Chinese data in sum are now coming well below consensus forecasts.

Fixed asset investment for the year-to-date to August is expected to rise 3.5 percent. This would compare with 3.6 percent in July which missed expectations for 3.9 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.