China’s Jan-Feb economic growth better than expected

China's retail sales grew 6.7 per cent in January-February 2022. PHOTO: BLOOMBERG

BEIJING - China's economy recorded better-than-expected growth for the first two months of this year, with retail sales, industrial production and fixed assets investments beating economists' expectations.

China combines economic data for the two months of a year to smooth out the impact of the week-long Chinese New Year holidays, which typically occur at different times during January and February.

Takings at the till in the world's second-largest economy grew 6.7 per cent in the first two months of 2022, compared with a year ago. The figure was more than double the 3 per cent increase that economists polled by Reuters and Bloomberg expected.

Industrial production, which gauges activity in the utilities, manufacturing and mining sectors, grew by 7.5 per cent. Bloomberg economists expected growth of 4 per cent, while a Reuters poll predicted a 3.9 per cent rise.

Fixed assets investment, which measures expenditure on infrastructure, property, machinery and equipment, grew 12.2 per cent, far above Bloomberg and Reuters economists' predictions of 5 per cent growth.

National Bureau of Statistics spokesman Fu Linghui told the media on Tuesday (March 15) at the release of the economic data that "mounting risks and challenges" lie ahead.

Dr Fu, who is also director-general of the bureau's department of comprehensive statistics, said officials were closely observing the economic impact of the current Covid-19 surge in the country, but he was optimistic that the situation will be contained quickly, given China's "rich experience in preventing (the virus') spread".

But economists remained sceptical, saying China's insistence on a zero-Covid-19 policy would weigh heavily on growth ahead, given that the current surge was caused mostly by the highly transmissible but less severe Omicron variant of the coronavirus.

"Covid-19 is (China's) biggest uncertainty this year," said chief China economist Larry Hu at Macquarie Group in Hong Kong, adding that the country should see a "sharp slowdown" this month as various provinces implement flash lockdowns and conduct mass testing.

Mr Zhang Zhiwei, chief economist at Pinpoint Asset Management, said "this round of Omicron outbreaks may be more difficult to contain", compared with earlier waves of the virus.

He added that given China's zero-Covid-19 policy, the government would have "no choice but to tolerate economic costs in the short term".

"The outlook in the next few months remains challenging," he said.

Industrial production, which gauges activity in the utilities, manufacturing and mining sectors, grew by 7.5 per cent. PHOTO: REUTERS

Besides uncertainty due to the pandemic, the crisis in Ukraine has also led to inflationary pressures worldwide, particularly on the cost of energy.

State planning officials said on the sidelines of a Parliament meeting earlier this month that Beijing would step up production of energy - oil, gas and coal - and boost reserves to keep prices under control.

China will release first-quarter growth figures next month, and this will provide a clearer indication of how hard it will be to achieve the 5.5 per cent growth target for the year, particularly given the uncertainties this month.

When Chinese Premier Li Keqiang announced the highly anticipated annual target earlier this month at the annual parliamentary meeting, he said "arduous effort" would be needed to achieve it.

Join ST's Telegram channel and get the latest breaking news delivered to you.