Pictured here is a Shanghai development under construction on Nov. 4, 2024.
Cfoto | Future Publishing | Getty Images
China’s economic data for the first two months of the year showed a modest pickup as Beijing reiterated its plan to bolster domestic consumption.
Retail sales rose by 4.0% in the January-February period from a year ago, compared with the 3.7% year-on-year growth in December and in line with Reuters estimates.
Industrial production climbed 5.9% in the first two months of the year from a year ago, slower than the 6.2% growth in December, but faster than a 5.3% expansion forecast by analysts in a Reuters poll.
Fixed asset investment, reported on a year-to-date basis, rose by 4.1%, beating the 3.6% growth estimated by economists, a notable jump from the 3.2% increase last year.
Chinese leadership took on a hefty task by keeping a growth target of “around 5%” this year, a target seen harder to reach given rising trade tensions with the U.S. and entrenched deflationary pressure for the economy.
Economists say Beijing will likely need to provide stronger stimulus to achieve this year’s growth target and bolster domestic consumption to fill the hole left by potentially slowing exports. Exports contributed nearly a quarter of China’s GDP last year.
In a sign of a persistent drop in demand, China’s consumer price inflation in February fell below zero for the first time in over a year. Beijing revised down its annual inflation target to “around 2%” — the lowest in more than two decades — from above 3% in prior years, a move seen to show a degree of official acceptance of the current deflationary environment.
As part of an expanded fiscal package, Chinese leaders pledged at an annual parliamentary meeting earlier this month an additional 300 billion yuan ($41.5 billion) of ultra-long special treasury bonds for consumers’ subsidy support.
Still, beyond the trade-in program, the existing stimulus measures have barely targeted consumers directly.
Chinese policymakers unveiled on Sunday a wide-ranging plan to stimulate domestic consumption, reiterating Beijing’s pledges to bolster residents’ income and household spending. The notice also repeated Beijing’s plan to stabilize the stock market, establish a childcare subsidy scheme as well as boosting tourism.
While the high-level document appears to lack concrete implementation details, it provides a glance into Beijing’s stance toward addressing some deep-seated issues, such as the slowing income growth and insufficient social safety net, Lynn Song, chief China economist at ING, told via email.
“Directionally it is quite encouraging that policymakers are taking a sober look at these themes, and it should help the longer term transition to a consumption driven economy,” he added.
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