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March 15, 2019

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China economy kicks off 2019 on stable note

CHINA’S economy remained stable in the first two months of the year, with economic data showing resilience and progress.

The National Bureau of Statistics yesterday unveiled a string of economic indicators for the January-February period, showing a pickup in investment, stable consumer spending and optimized industrial structure.

Industrial output grew 5.3 percent year on year in the first two months, with fast growth in emerging industries and new products. The growth narrowed from a 5.7 percent expansion in December, the bureau said, citing the Spring Festival as a major factor for the slowdown.

In February alone, industrial output was 0.43 percent higher than January’s.

It is estimated that the industrial production would have grown 6.1 percent year on year in the first two months if distortions from the Spring Festival were excluded.

Fixed-asset investment, a major growth driver, grew 6.1 percent year on year in the first two months of 2019, 0.2 percentage points higher than that recorded in 2018.

Domestic demand maintained steady growth, given stable FAI and consumption expansion, said Mao Shengyong, a spokesman for the statistics bureau.

The 6.1 percent growth was also in line with market expectations, Japanese securities brokerage Nomura said in a report.

The Australia and New Zealand Banking Group noted: “Although the pace of recovery is slightly slower than we expected, the uptrend is well in place and likely to continue on the back of special local government bond issuance and approval of FAI projects in the coming months.”

Retail sales of consumer goods, an indicator of consumption, rose 8.2 percent, flat with that in December.

“The national economy in the first two months of this year continued to remain stable while making progress,” Mao said, noting the economy performed within a reasonable range.

He said yesterday’s data showed some bright spots in the Chinese economy, including rising domestic demand, optimized industrial structure, stable employment and consumer prices, and positive market expectation.

The investment in the tertiary industry expanded 6.5 percent, picking up pace from the 5.5 percent increase in 2018.

After deducting price factors, retail sales of consumer goods grew 7.1 percent in real terms, accelerating from December’s 6.6 percent rise, a sign of rising domestic demand, according to the statistics bureau.

Consumption in rural areas climbed 9.1 percent, outpacing a rise of 8 percent in urban regions. The catering industry reported a 9.7 percent increase in revenue.

Online retail sales maintained robust growth, up 13.6 percent, with physical commodity sales surging 19.5 percent from one year earlier.

China’s consumer confidence index rose 2.3 points to 126 in February from January, pointing to a positive outlook of market expectation.

With a market of nearly 1.4 billion increasingly prosperous population, China strives to make consumption a major driver of its economic growth. Consumption contributed to 76.2 percent of last year’s GDP growth. Retail sales rose 9 percent to 38.1 trillion yuan (US$5.7 trillion) in 2018.

Strategic industries

Meanwhile, the industrial structure continued to improve. Production in strategic emerging industries maintained fast expansion, with its output increasing by 10.1 percent.

The output of new-energy vehicles saw a surge of 53.3 percent year on year during the period, while solar cell production rose by 13.5 percent.

Investment in high-tech industries and industrial technology improvement jumped 8.6 percent and 19.5 percent year on year, both faster than the overall growth of fixed-asset investment.

The service output index rose 7.3 percent year on year, flat from December, the bureau said. The information transmission, software and information technology service industry jumped 26.5 percent, and the leasing and business service sector increased by 7.9 percent year on year.

Property investment jumped 11.6 percent in the first two months, lifted by investment growth in east and west China. The growth was faster than the 9.5 percent expansion recorded in 2018.

The total property investment amounted to 1.2 trillion yuan, with 72.1 percent used in residential buildings, the bureau said.

Despite mounting external uncertainties, yesterday’s data was the latest in a slew of economic barometers that showed resilience and progress in the Chinese economy. The growth in China’s foreign trade of goods rebounded strongly after the weeklong Spring Festival holiday. In the first eight days of March, the country’s foreign trade soared 24.7 percent, with exports rising nearly 40 percent.


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