The recently released data showed that China's fixed-asset investment grew 9% in the first half of 2016 while private investment slowed sharply to 2.8% and recorded its first negative growth in June this year (a decrease of 0.1% year on year).

Correspondingly is the rapid growth in investment by state-owned enterprises which grew 23.5% in the first half of the year.

This has heightened the public’s concern on whether the sharp decrease in private investment will take a heavy toll on China’s economy.

The research team at ANBOUND Consulting is of the view that a shift in the dynamics of the country's money supply is not the only reason why private investment has fallen.

The return of investment is low, the threshold for private investment is high, the burdens arising from corporate tax and financing cost are too huge, and the massive capital outflows as well as other factors have all contributed to the collapse in private investment growth.

Unless and until a substantive progress is made in the structural reform on the supply side, it will be difficult to expect a significant recovery of private investment