China’s economy sees strong start to year as industrial output beats expectations
Latest figures show world’s second-biggest economy continues to sustain its momentum
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 of this year from the same period a year earlier, the National Bureau of Statistics said on Wednesday, 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 fell in late January 2017 but started in mid-February this year.
As such, a clearer picture of China’s economic health may not emerge until first-quarter data is released in April.
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 exports unexpectedly surged at the fastest pace in three years in February even while trade relations with the United States rapidly deteriorated.
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 7.0 per cent from a 7.2 per cent pace in all of 2017.
Private sector fixed-asset investment rose 8.1 per cent, compared with an increase of 6.0 per cent in 2017. 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 China aims to expand its economy by around 6.5 per cent this year, the same target that it handily beat in 2017 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 of debt.