China economy advanced in January and February, but mixed data underscores uneven nature of recovery

Retail sales grew by 33.8 per cent in the combined figures for January and February, while industrial production grew by 35.1 per cent from a year earlier
Last week, Premier Li Keqiang confirmed China had set an economic growth target of ‘above 6 per cent’ for 2021 after the economy grew by 2.3 per cent last year

China economy

Orange WangandAndrew Mullen

Published: 10:00am, 15 Mar, 2021

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China’s economy continued to advance, combined figures for January and February released on Monday showed, although the numbers are difficult to interpret due to the weak comparison base from a coronavirus-hit 2020.

Both retail sales and industrial production data were stronger than expected, suggesting that the economy continued to gain momentum in the first two months of 2021. However, fixed asset investment growth was lower than expected, while the surveyed unemployment rate rose during the first two months of the year, underscoring the uneven nature of the economic recovery.

Retail sales grew by 33.8 per cent year on year in the combined figures for January and February, compared to a growth of 4.6 per cent in December. This was above with the expectations of a median survey of Bloomberg analysts which had predicted a rise of 32 per cent. This marked the sixth successive period of expansion.

The surge in percentage terms, though, was due in large part to the low comparison base from the same period last year when the coronavirus tore through the world’s second-largest economy.

In combined figures for January and February last year, retail sales, a key metric of consumption, fell by 20.5 per cent, the first decline on record.

In January and February this year, industrial production grew by 35.1 per cent from a year earlier, above analysts’ forecasts of 31.6 per cent and up from a growth of 7.3 per cent in December. Industrial production is a measure of manufacturing, mining and utilities activity.

Again, the surge is due in large part due to the low comparison base from the same period last year when industrial production declined by 13.5 per cent.

Fixed asset investment – a gauge of expenditure on items including infrastructure, property, machinery and equipment – grew by 35 per cent in the combined figures for January and February compared to a year earlier.

This was below the median of the Bloomberg survey, which called for an increase of 41 per cent.

The surveyed jobless rate, an imperfect measurement of unemployment in China which does not include figures for the tens of millions of the nation’s migrant workers, stood 5.5 per cent in February from 5.4 in January and 5.2 per cent in December.

Domestically, the unbalanced recovery is still notable and the foundation for the economic recovery is not solid yet

Liu Aihua

Last week, Premier Li Keqiang confirmed China had set an economic growth target of ‘above 6 per cent’ for 2021. He also confirmed China has set a target of creating 11 million new urban jobs and a surveyed urban unemployment rate of 5.5 per cent.

“In the first two months, the economy kept the momentum of recovery and positive factors continued to accumulate,” said National Bureau of Statistics spokeswomen Liu Aihua.

“However, we must be aware that the Covid-19 pandemic is still rampaging globally and the world economy is facing severe challenges. Domestically, the unbalanced recovery is still notable and the foundation for the economic recovery is not solid yet.”