The national fixed asset investment for the first quarter of 2016 increased 10.7% year-on-year, an increase of 0.5% compared to January and February

However, fixed asset investment by private companies rose just 5.7% in the first quarter from a year earlier, a decline of 3% year on year.

The private investment focused mainly on manufacturing sector which is troubled with severe falls in profit and the pressure to cut overcapacity and excess inventory. Overall, the manufacturing sector is at a contraction, readjustment period and this coupled with the repeated incidents of debt defaults and insolvency cases, the private investors do not have much investment choices.

ANBOUND's research team is of the view that decline in private investment growth is a real warning to China’s economy, if the investment led by the government and the state-owned enterprises lose momentum (which is almost an inevitable outcome), then the performance of China’s economy will depend mainly on consumption.

If the consumption fails to drive economic growth, then the recovery in China’s macro economy will not last long.