Chinese fixed asset investment rose 3.7 percent on the year-to-date in May, slowing from an increase of 4.0 percent in April and below the consensus forecast of 4.0 percent. In month-over-month terms, fixed asset investment rose 0.05 percent in May after an increase of 0.10 percent in April.

In their statement accompanying today's data, officials characterised the data as showing the economy maintained stability, with steady growth in production and demand. Officials again cited many unstable and uncertain factors in the external environment, reinforcing their urgency to develop domestic sources of demand in order to deliver a more sustainable economic recovery. Although they again pledged to implement more proactive and effective macro policies", officials provided no specific guidance about whether additional changes to policy settings will be considered in the near-term.

Activity data published today were mixed relative to consensus forecasts, with retail sales stronger and industrial production and fixed asset investment somewhat stronger. The China's RPI rose from minus 21 to minus 7 while the RPI-P rose from minus 30 to minus 10, indicating that recent Chinese data in sum are still coming in just below consensus forecasts.

Forecasters see FAI growth steady year on year at 4.0 percent in May versus 4.0 percent in April.

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.