Industrial Output and Retail Sales in China
Industrial output in China surged by 7.0 per cent year-on-year during the January-February period, marking an acceleration from the previous month and exceeding expectations. This growth rate provides a promising start for the year and offers relief to policymakers.
National Bureau of Statistics Data
- The figure surpassed forecasts from analysts, who had anticipated a 5.0 per cent increase.
- Retail sales, a barometer of consumption levels, increased by 5.5 per cent in the first two months of the year, indicating relatively strong consumer spending.
- Fixed asset investment expanded by 4.2 per cent during the same period, exceeding expectations and showing increased investment sentiment and activity.
Improvement in China’s Housing Market
China’s housing market, which has been facing a downturn, showed signs of improvement at the beginning of the new year due to government interventions aimed at stabilising the sector.
Property Investment and Sales
- Property investment decreased by 9.0 per cent year-on-year in the first two months of 2024, a notable improvement from the decline recorded in December 2023.
- Property sales also experienced a milder contraction, with a 20.5 per cent slide in January-February compared to the previous year.
- Despite challenges, the sector continues to struggle, with home prices seeing a month-on-month decline in February.
Resilience of China’s Economy in 2024
China’s economy has shown resilience in early 2024, with industrial output and retail sales exceeding expectations, offering a positive outlook for the year despite challenges in the property sector.
Positive Economic Indicators
- Industrial output surged by 7.0 per cent in the first two months of the year, surpassing analysts’ forecasts and marking the quickest growth in almost two years.
- Retail sales rose by 5.5 per cent, supporting revenue in various sectors and driving growth in oil refinery throughput.
- Despite structural challenges, there are signs of resilience in certain areas of the economy, with fixed asset investment expanding by 4.2 per cent.
Policy Measures and Future Outlook
Chinese authorities have intensified efforts to revitalize the housing market and stabilize growth through policy easing and targeted interventions.
Goldman Sachs Economists’ Recommendations
- Further policy easing, particularly on the demand side, is crucial to achieving China’s growth target for the year.
- More support in areas such as fiscal stimulus, housing, and consumption is necessary to sustain growth momentum.
Premier Li Qiang and central bank governor Pan Gongsheng have pledged to address structural challenges and implement measures to stabilize growth in the future.
