China's industrial output witnessed a significant surge in the period of January-February, surpassing expectations and marking the fastest growth in nearly two years.
Citing Reuters on Monday (18/3), data released by the National Bureau of Statistics (NBS) indicated a 7.0% increase in industrial output during the first two months of this year. This growth exceeded analysts' expectations polled by Reuters, which had forecasted a 5% increase.
Simultaneously, retail sales data showed a 5.5% increase, higher than analysts' expectations of 5.2%. However, the growth in retail sales, a measure of consumption, slowed from December 2023, which stood at 7.4%.
The eight-day Lunar New Year holiday in February showcased a robust return of the travel sector, supporting revenues in the tourism and hospitality sectors.
Fixed-asset investment also saw an uptick of 4.2% in the first two months of 2024 compared to the same period last year, exceeding the expected increase of 3.2%.
Alongside better-than-expected trade data and consumer inflation, the indicators released on Monday provide a temporary boost for policymakers as they aim to sustain the world's second-largest economy's growth trajectory at around 5% this year.
However, analysts suggest achieving this growth target will be more challenging compared to last year, which had lower base effects due to Covid restrictions in 2022.
Moreover, the property sector remains weak and could continue to be a major hurdle for a solid recovery this year.
Property investment declined by 9.0% annually in January-February, compared to a 24.0% drop in December but still far from stabilized levels.
To smooth out distortions caused by the timing of the Lunar New Year, the NBS releases combined data for industrial output and retail sales for January and February.
Activity surged in the first two months of 2023 following the lifting of Covid restrictions, which might create less favorable base effects for this year's data.
Prime Minister Li Qiang pledged at the early annual parliamentary meeting this month to reshape the country's growth model and reduce risks in the property and local government debt sectors.
China plans to issue 1 trillion yuan worth of special long-term government bonds to support key sectors and set higher quotas for local government special bond issuance this year.
The central bank governor, Pan Gongsheng, also mentioned at a press conference on March 6 that there is still room to cut the bank reserve requirement ratio (RRR) following the 50 basis points cut announced in January, the largest drop in two years.
Financial News reported on Friday that the bank has no intention to actively drain liquidity, after maintaining interest rates and withdrawing cash from medium-term policy lending operations for the first time in 16 months.
Authorities in January launched a whitelist mechanism, urging government banks to increase lending for housing projects. Other major cities including Shanghai and Shenzhen have also eased purchase restrictions to attract homebuyers.
The labor market deteriorated with the national survey-based unemployment rate reaching 5.3% in January-February, up from 5.1% in December.