China economic pickup tops forecasts before tariff pain deepens
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Retail sales increased 4 per cent in January-February from the same period a year earlier.
PHOTO: AFP
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BEIJING – Consumption and industrial production in China grew faster to start the year, in an upswing that exceeded forecasts as US President Donald Trump’s tariffs
Retail sales increased 4 per cent in January-February from the same period a year earlier, the National Bureau of Statistics said on March 17, exceeding economist forecasts and accelerating from a 3.7 per cent gain in December.
Industrial output rose 5.9 per cent, higher than the median estimate in a Bloomberg survey of analysts. Growth in fixed-asset investment picked up to 4.1 per cent.
The retail data is in a “nice and comfortable range”, said Dr Helen Qiao, chief economist for greater China for Bank of America Global Research. “That probably implies that further policy stimulus is still warranted. At the same time, it is not too weak that people would worry before the policy kicks in.”
The figures provide the most comprehensive snapshot yet of how the world’s second-biggest economy has fared since Mr Trump embarked on a new trade war. China combines data for January and February to smooth out distortions caused by the irregular timing of the Chinese New Year holiday.
“The national economy maintained the new and positive development momentum,” the statistics bureau said. But it warned that “the external environment is increasingly complex and severe, the domestic effective demand is weak, some enterprises face difficulties in production and operation, and the foundation for sustained economic recovery and growth is not strong enough”.
“The market reaction has been underwhelming” to the “mixed picture” painted by the numbers, said Mr Billy Leung, an investment strategist at Global X ETFs. He said investors were “hoping for more from policy”.
Lifting consumer spending is key to countering US policies that are upending global trade and causing a slowdown of Chinese exports, which contributed to nearly a third of the country’s economic expansion in 2024.
China’s front-loading of shipments abroad has been supporting industrial production at the start of the year, according to Ms Jacqueline Rong, chief China economist at BNP Paribas. Exports reached a record US$540 billion (S$720.3 billion) in the first two months of the year.
“Looking forward, the tariff impact on exports will become evident sooner or later, and the downside risks on exports will definitely show up,” she said.
The government unveiled a special action plan aimed at reviving consumption in the country over the weekend. It marks China’s latest effort to expand domestic demand, the government’s top economic task in 2025 as it seeks to achieve an ambitious growth target of around 5 per cent.
Gains in retail sales have continued to lag behind growth in industrial production, a divergence that was evident throughout 2024. China’s factory activity returned to expansion in February, according to the official manufacturing purchasing managers’ index released earlier in March.
Even so, the consumer economy is stabilising after a slowdown, as government subsidies coax consumers to buy new smartphones, home goods and cars. Holidaymakers also splurged during the week-long Chinese New Year break in early February.
Mr Nathan Chow, a senior economist at DBS Bank, said the figures suggested that a bottoming out of the economy is forming. The data “is a plus definitely. That should give the recovery more staying power than just a rally based on policy news and hype”, he added. BLOOMBERG
