China Confident in Recovery of Economic Indicators Despite Continued Weak Demand (Comprehensive)

Industrial Production Surges 7% Year-on-Year
Statistics Bureau Spokesperson: "5% Growth Target Achievable"

China's industrial indicators showed a clear improvement trend, with authorities expressing confidence in economic growth. However, concerns remain that persistent weak consumer activity and a sluggish real estate market are putting pressure on the Chinese economy.

On the 18th, the National Bureau of Statistics of China announced that industrial production in January and February increased by 7.0% year-on-year. This figure exceeded both market expectations (5.3%) and the previous month's figure (6.8%). The growth rate was the highest in about two years since February 2022 (7.5%).

[Image source=EPA Yonhap News]

Industrial production aggregates the total output of factories, mines, and public facilities, reflecting manufacturing trends. It also serves as a leading indicator for employment and average income. Considering that the Lunar New Year changes annually, China releases major economic indicators such as industrial production and retail sales combined for January and February to avoid statistical distortions.

Specifically, manufacturing output rose by 7.7%, with high-tech manufacturing and 3D printer industrial production increasing by 7.5% and 49.5%, respectively. Charging equipment and electronic components also grew by 41.8% and 41.5%, driving the improvement in indicators.

On the other hand, domestic demand showed a relatively weak trend. Retail sales in January and February increased by 5.5% year-on-year, falling short of the previous month's 7.4%. However, this was close to market expectations (5.6%) and even exceeded some major foreign media estimates (5.0%).

By sector, food service sales rose by 12.5%, while telecommunications equipment, sports and leisure, and automobile sales increased by 16.2%, 11.3%, and 8.7%, respectively. Sales growth by channel was recorded at 7.8% for specialty stores, 5.8% for convenience stores, 4.2% for brand stores, and 0.9% for supermarkets. Conversely, department store sales declined by 3.0%.

The unemployment rate worsened to 5.3% from 5.1% at the end of last year, marking the highest level since July last year. During the same period, fixed asset investment rose by 4.2%, surpassing expectations (3.2%) and the previous month's figure (3.0%). Notably, private investment increased by 0.4%, reversing last year's downward trend (-0.4%). The urban unemployment rate in February was 5.3%, worsening from the previous announcement of 5.1%. The statistics bureau plans to release youth unemployment figures within two to three days.

[Image source=EPA Yonhap News]

With economic indicators exceeding expectations, authorities have expressed confidence in economic growth. Liu Aihua, spokesperson for the National Bureau of Statistics, said at a press conference held that day, "Although the economic development environment remains complex and severe, the fundamentals of the Chinese economy continue to improve, and positive factors promoting economic recovery are accumulating." She added, "The sustained effects of macro policies will support achieving the approximately 5% economic growth target, which can be accomplished through concerted efforts."

She also emphasized, "Freight transport volume in January and February increased by 7.5% year-on-year, and passenger transport for business purposes rose by 27.4%. Market vitality has improved, showing particularly remarkable results in the service consumption sector." She further noted, "During the Lunar New Year holiday, cultural tourism consumption showed outstanding performance, and domestic travel consumption increased by 47.3%."

However, the market still views demand as insufficient, with risks such as real estate uncertainties persisting. Michel Lam, Greater China economist at Soci?t? G?n?rale, told Bloomberg, "The economy is stabilizing due to supply-side stimulus measures and some improvement in export demand, but consumer demand remains a weakness." Real estate investment in China fell by 9.0% in January and February. Although this is somewhat improved compared to the end of last year (-24.0%), it still reflects market unease.

This content was produced with the assistance of AI translation services.