People buy food at a street stall in Chengdu, Sichuan province, China, June 22, 2021.
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BEIJING – China reported on Tuesday better-than-expected growth in retail sales, fixed asset investment and industrial production earlier this year.
The data released combines January and February as is customary by the Chinese statistics bureau to avoid deviations from the Lunar New Year holiday, which can fall in one of two months depending on the year.
Retail sales rose 6.7% year-on-year, topping analyst expectations polled by Reuters for 3% growth from a year ago. Furniture was the only item in retail sales that fell, down 6%. Petroleum products and gold, silver and jewelry posted the strongest gains.
Fu Linghui, a spokesman for the National Bureau of Statistics, said: The steady growth in auto sales – after a steep decline last year – has helped boost retail sales, as well as consumer demand. use during the Lunar New Year and interest in Olympic-related products. reporters at a news conference on Tuesday.
However, he noted that recent Covid outbreaks will likely limit consumption in certain regions and that the foundation for a recovery in consumer spending is not yet strong.
“Certainly, hitting the full-year target of around 5.5% will require arduous effort,” Fu said in Mandarin, according to a translation by CNBC.
Industrial production also beat, rising 7.5% versus expectations for 3.9% growth.
Fixed asset investment rose 12.2%, much higher than forecast for a 5% increase. In the fixed asset investment sector, investment in the high-tech manufacturing sector was one of the biggest gainers, up 42.7%. Infrastructure investment increased by 8.1%. Investment in real estate development increased by 3.7%, even as commercial floor space for sale decreased by 9.6%.
The real estate sector – which contributes about a quarter of GDP – has shrunk since Beijing began cracking down on developers’ heavy reliance on debt over the past two years.
Sian Fenner, lead Asia economist at Oxford Economics, said on CNBC’s “Street Signs Asia” that she expects increased fiscal spending to boost infrastructure development, but not enough to offset it. offset the downturn in real estate. She predicts the stimulus measures will hit the economy enough to boost growth to an expected 4.9% this year and nearly 5.4% next year.
The unemployment rate in cities has increased to 5.5% in February since January, with the unemployment rate of 16-24 year olds still much higher at 15.3%.
The national economy maintained a stable recovery, production demand increased rapidly, employment and prices were generally stable, new drivers continued to develop, and quality development continued. high has made new progress”.
Last week, China’s central government announced an official GDP target of “about 5.5%” been a year.
Many economists say this goal is ambitious, especially after Resurrection in Covid cases forcing factories to suspend production.
Iris Pang, chief economist for Greater China at ING, said Tuesday on CNBC “Squawk Box Asia“before the release of the data she was considering downsizing her 6.8% GDP forecast because of the Covid situation.
The new restrictions have hit major cities like Shenzhen and Shanghai in the worst pandemic wave the country has seen since the initial shock just over two years ago.
Those developments will affect the economic recovery at the local level, but not so much at the national level, NBS’ Fu said.
However, he warned that many risks to growth remain in the coming year.
“The international environment is quite complex and harsh,” he said. “In particular, the Russian-Ukrainian military conflict and geopolitical tensions have caused international commodity prices to fluctuate greatly, and their impact on domestic production cannot be ignored.”
– CNBC’s Charmaine Jacob and Chelsea Ong contributed to this report.