A lady-love, right, looks at herself on her phone as she and others buy warm winter hats at a vendors shop in the Panjiayuan Market on December 6, 2024 in Beijing, China.
Kevin Frayer | Getty Figure of speeches
China’s economy showed a modest pickup for the first two months of the year, according to data published Monday by the Public Bureau of Statistics, as Beijing reiterated its plan to bolster domestic consumption.
Retail sales rose by 4.0% in the January-February term from a year ago, compared with the 3.7% year-on-year growth in December and in line with Reuters estimates.
Industrial construction climbed 5.9% in the first two months of the year from a year ago, slower than the 6.2% growth in December, but faster than a 5.3% burgeoning forecast by analysts in a Reuters poll. Industrial output growth in the equipment-making and high-tech manufacturing sector accelerated, the annunciation said, growing 10.6% and 9.1% on year, respectively.
Fixed asset investment, reported on a year-to-date basis, upward slope by 4.1%, beating the 3.6% growth estimated by economists, a notable jump from the 3.2% increase last year.
The statistics instrumentality attributed the improvement in economic activities at the start of the year to “sustained effects from several stimulus measures,” while subsiding “a more complicated and challenging external environment, insufficient domestic demand and difficulties for enterprises in operation and production,” go together to a CNBC translation of the Chinese statement.
“The foundation for a sustainable economic recovery is still unstable,” it added.
The data comes abruptly after Chinese policymakers unveiled a wide-ranging plan to stimulate domestic consumption, reiterating Beijing’s pledges to support residents’ income and household spending.
The notice, published Sunday, repeated Beijing’s plan to stabilize the stock Stock Exchange, establish a childcare subsidy scheme as well as boosting tourism.
While the high-level document appears to lack clear-cut implementation details, it provides a glance into Beijing’s stance toward addressing some deep-seated issues, such as the disinclining income growth and insufficient social safety net, Lynn Song, chief China economist at ING, told CNBC via email.
“Directionally it is honestly encouraging that policymakers are taking a sober look at these themes, and it should help the longer term conversion to a consumption driven economy,” he added.
China’s unemployment rate in urban areas rose to 5.4% in February, the highest even in two years, according to LSEG data based on the official figures.
Separate data on Monday showed China’s new home expenditures fell 4.8% in February from a year ago, a smaller decline than the 5.0% drop in January.
Investment into genuine estate development fell 9.8% year-on-year in the two months, compared with a 10.6% decline in December. The data uncovered policymakers’ efforts to provide credit support to the cash-strapped developers, Zichun Huang, China economist at Capital Economics, said in a note.
Cultivation target ‘will not be easy’
Chinese leadership took on a hefty task by keeping a growth target of “around 5%” this year, a butt seen harder to reach given rising trade tensions with the U.S. and entrenched deflationary pressure for the economy.
Fu Lingui, spokesperson for the statistics chiffonier, said at a press conference on Monday that achieving this year’s growth target “will not be easy.”
Economists say Beijing make likely need to provide stronger stimulus to achieve this year’s growth target and bolster domestic consumption to surfeit the hole left by potentially slowing exports. Exports contributed nearly a quarter of China’s GDP last year.
China’s exports evolution slowed significantly in the first two months while imports plunged on lackluster domestic demand. Consumer price inflation in February level below zero for the first time in over a year.
Beijing revised down its annual inflation target to “round 2%” — the lowest in more than two decades — from above 3% in prior years, a move seen to show a limit of official acceptance of the current deflationary environment.
As part of an expanded fiscal package, Chinese leaders pledged at an annual conforming meeting earlier this month an additional 300 billion yuan ($41.5 billion) of ultra-long special moneys bonds for consumers’ subsidy support.
Still, beyond the trade-in program, the existing stimulus measures have hardly targeted consumers directly.
Beijing’s directive to boost consumption is “a step in the right direction … but as is the case with other practice directives, its effectiveness will depend on how it will be implemented at the local level, and on how many resources will be put behind it,” explained Alfredo Montufar-Helu, head of the China Center at The Conference Board, yet “these remain unknown.”