China's industrial output grows faster than forecast

China's industrial output grew 7.2 per cent in January and February, surpassing estimates for a rise of 6.1 per cent. But this figure may not paint an accurate picture of the country's economic health, as the timing of the Lunar New Year celebrations
China's industrial output grew 7.2 per cent in January and February, surpassing estimates for a rise of 6.1 per cent. But this figure may not paint an accurate picture of the country's economic health, as the timing of the Lunar New Year celebrations could have distorted the data. China aims to expand its economy by around 6.5 per cent this year.PHOTO: AGENCE FRANCE-PRESSE

BEIJING • China's industrial output expanded faster than expected at the start of the year, suggesting the world's second-biggest economy has sustained solid momentum despite a crackdown on polluting industries and a campaign to reduce risks in the financial system.

Fixed asset investment also handily beat forecasts, while retail sales growth improved from December but came in slightly below expectations for the first two months of the year.

Industrial output rose 7.2 per cent in the first two months this year from the same period a year earlier, the National Bureau of Statistics said yesterday, surpassing analysts' estimates for a rise of 6.1 per cent and picking up sharply from 6.2 per cent in December.

However, data from China early in the year is typically treated with caution due to distortions caused by the timing of the week-long Lunar New Year celebrations, which were held in late January last year but started instead in mid-February this year. Hence, a clearer picture of China's economic health may not emerge until first-quarter data is released next month.

Many economists expect momentum to slow this year. But a clutch of readings so far, ranging from official data to private surveys, suggest China's growth is still resilient, keeping a synchronised global recovery on track.

Trade data last week showed that exports unexpectedly surged at the fastest pace in three years last month, even as trade relations with the United States rapidly deteriorate.

China's fixed-asset investment growth unexpectedly picked up to 7.9 per cent in January-February. Analysts polled by Reuters had predicted it would cool to 7 per cent from a 7.2 per cent pace in all of 2017.

Many economists expect momentum to slow this year. But a clutch of readings so far, ranging from official data to private surveys, suggest China's growth is still resilient, keeping a synchronised global recovery on track.

Private sector fixed-asset investment rose 8.1 per cent, compared with an increase of 6 per cent last year. Private investment accounts for about 60 per cent of overall investment in China.

Retail sales rose 9.7 per cent, slightly missing expectations of 9.8 per cent growth but up from 9.4 per cent in December.

Premier Li Keqiang said last week that China aims to expand its economy by around 6.5 per cent this year, the same target that it handily beat last year thanks in part to massive government infrastructure spending and record bank lending.

But comments by top officials at China's Parliament in the past week suggested that Beijing will be more cautious about spending this year while it focuses on reducing the risks from a rapid build-up in debt.

REUTERS

A version of this article appeared in the print edition of The Straits Times on March 15, 2018, with the headline 'China's industrial output grows faster than forecast'. Print Edition | Subscribe