China’s economy has rebounded in the first two months of 2022, with key indicators all beating analysts’ expectations, although an increase in Omicron business, weak real estate and heightened global uncertainties are weighing on forecasts. prospects.
Industrial production rose 7.5% in January-February from a year earlier, the fastest pace since June 2021 and up from a 4.3% increase seen in December, the data showed. from the National Bureau of Statistics released on Tuesday. That compares with a 3.9% rise expected by analysts in a Reuters poll.
Retail sales, a lagging indicator of consumption since the hit of COVID-19, rose 6.7% year-on-year amid rising demand during the Lunar New Year holidays and the Olympics. winter. It also marked the fastest clip since June last year and beat expectations for a 3.0% rise in the poll.
It recorded a gain of 1.7% in December.
The surprisingly strong performance of the world’s second-largest economy in the new year may have enabled the People’s Bank of China (PBOC) to keep its policy rates stable on Tuesday, said Iris Pang, chief economist for Greater China at ING, in a note.
The PBOC kept its one-year medium-term lending rate unchanged earlier in the day, dashing expectations of a cut, although investors believe policymakers may soon resume monetary easing to support the slowdown. economy.
The published statistics combine economic data from January to February to help smooth out distortions caused by the Lunar New Year holiday, which fell in early February this year.
One of the data highlights was strong retail sales growth, which was boosted by sales of Winter Olympics-related products such as ski equipment and ice sports, Fu said. Linghui, spokesperson for the statistics bureau, at a press conference.
The strong numbers came after growth lost momentum throughout last year due to a liquidity crunch in the housing market and stringent anti-virus measures that hit consumption.
“Indeed, every data point has bounced back, mainly because the political effects started early this year, with an easing in the infrastructure and real estate sectors. Restoration spending also remained relatively strong,” said Qu Qing, chief economist at Jianghai Securities.
However, analysts warn that any nascent recovery, which would help China reach an ambitious target of around 5.5% for 2022, could not be sustained due to the surge in COVID cases, a weak real estate market and the uncertain global recovery.
Chinese stocks fell sharply on Tuesday as a rise in coronavirus cases overshadowed data and threatened the outlook.
“The momentum of economic recovery in January-February has been good. At the same time, we must also see that the external environment is still complex and severe, and China’s economic development faces many risks and challenges. “said Mr. Fu from the statistics office.
Analysts expect the central bank to continue to ease policy to support the economy.
Prime Minister Li Keqiang said last week he was confident of achieving this year’s economic growth target of around 5.5% despite challenges including the war in Ukraine. Li also promised to provide more political support during the year.
Investments in fixed assets rose 12.2% in January-February from a year earlier, compared with a 5.0% increase predicted by a Reuters poll and 4.9% growth in 2021. The figure was the highest since July last year.
Investments in infrastructure rose 8.1%, helped by the move to this year’s early-loading 2022 local government special bonds.
Real estate investment rose 3.7% year on year in the first two months of 2022, following a 13.9% plunge in December, the data showed.
The slowdown in the housing market has also shown signs of easing, but sales are still mired in contraction while new construction starts have fallen by double digits.
“We continued to stabilize land prices, house prices and expectations, and there were positive changes in the real estate market,” Fu said.
China’s property market cooled last year as Beijing’s deleveraging drive triggered a liquidity crunch in some major property developers, leading to bond defaults, plummeting stock prices and suspended or suspended projects. left unfinished.
Australian Associated Press