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Fixed-asset investment in China experienced growth during the January to February period, marking a reversal of decline since last September and reflecting a notable recovery in key economic indicators as the economy starts the year strongly.
Excluding rural households, fixed-asset investments increased by 1.8% to CNY 5.27 trillion (USD 764 billion) in the first two months compared to the previous year. When excluding real estate development, which declined by 11% to CNY 961.2 billion (USD 139 billion), the investment rose by 5.2%.
Meanwhile, industrial value-added output grew by 6.3%, and retail sales of consumer goods topped CNY 8.61 trillion, up 2.8%. These figures improved from December’s growth rates of 5.2% and 0.9%, respectively.
At a press briefing, Fu Linghui, spokesperson for the National Bureau of Statistics, highlighted that the Chinese economy has had a strong start this year, despite challenges posed by global uncertainties and rising external risks, particularly related to geopolitical tensions. He noted that China has implemented more proactive and effective economic policies to stabilize growth.
During the first two months, production and supply increased swiftly, domestic demand remained steady, employment and prices stayed relatively stable, and new productive forces continued to develop robustly.
However, Luo Zhiheng, chief economist at Yuekai Securities, pointed out that the later Chinese New Year holiday shifted the usual economic cycle, which includes a period of pre-holiday rush, a holiday slowdown, and post-holiday recovery. This shift inflated the year-over-year data for January and February and may result in downward pressure on the figures for March.
Luo advised caution in interpreting the “good start,” emphasizing that a decline in March should not be seen as a sign of weakening economic momentum. He stressed that the full first-quarter data offers a more accurate picture of overall economic performance.
The annual growth target for this year is set between 4.5% and 5%, with officials urging efforts to achieve better results through improved policies. Fiscal spending remains substantial, and structural monetary tools will continue to be optimized and innovated. Efforts to expand domestic demand will be intensified, according to Wen Bin, chief economist at China Minsheng Bank.
Wen indicated that the economy might experience lower growth early in the year but could accelerate later, and there remains the potential to surpass expectations.
Given the timing of the Chinese New Year and holiday effects, long holiday-associated disruptions are expected to extend into March, affecting industrial production negatively. Export growth is also likely to slow, further dampening its support for industrial activity, Wang Qing, chief macroeconomic analyst at Golden Credit Rating International, told reporters.
Wang estimates that industrial value-added output growth may slow to around 5% in March. Over the course of the year, challenges such as diminishing export growth, ongoing real estate market adjustments, and efforts to reduce excessive competition may influence industrial production from both supply and demand perspectives.
Manufacturing investment in China increased by 3.1% in January and February compared to the previous year.
The Government Work Report emphasizes the importance of accelerating the development of new growth drivers and advancing high-tech manufacturing, indicating that investment in this sector is expected to remain strong and possibly even grow further in the upcoming quarter.
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