China's economy experienced a modest recovery in the first two months of the year, according to data released by the National Bureau of Statistics. As Beijing reiterates its commitment to boosting domestic consumption, fixed asset investment and retail sales have reported notable increases. This comes as policymakers aim to transition towards a consumption-driven economy.
China's fixed asset investment rose by 4.1% year-to-date, surpassing economists' expectations of a 3.6% growth. This increase is a significant improvement over last year's 3.2% growth. Retail sales also saw a positive trajectory, rising by 4.0% for the January-February period, in line with Reuters estimates. In comparison, retail sales growth in December was recorded at 3.7% year-on-year.
The industrial sector also demonstrated strong performance, with industrial production climbing 5.9% in the first two months of the year. This growth outpaced analysts' forecasts of a 5.3% expansion, although it fell slightly short of December's 6.2% growth rate.
China's economy is still navigating challenges, as consumer price inflation fell below zero for the first time in over a year. In response, Beijing has revised down its annual inflation target to "around 2%".
Exports continue to play a significant role in China's economy, contributing nearly a quarter of the country's GDP last year. The government's strategic focus on domestic consumption suggests a shift towards reducing reliance on exports and fostering sustainable economic growth.
"Directionally it is quite encouraging that policymakers are taking a sober look at these themes, and it should help the longer term transition to a consumption driven economy." – Lynn Song, chief China economist at ING.