• Bloomberg


China’s economic activity surged in the first two months of the year, underscoring the strength of its “V-shaped” recovery a year after the world’s first coronavirus lockdown.

The official figures released Monday show eye-popping growth rates of more than 30% for industrial production, retail sales and fixed asset investment, though the data is distorted by comparisons from a year ago when the economy was virtually shut down. Growth has since rebounded on the back of strong industrial output and export demand, while consumer spending has slowly picked up.

Key highlights of the data:

  • Industrial production jumped 35.1% in the January-February period from a year earlier, compared with a median estimate of 32.2% in a Bloomberg survey of economists.
  • Retail sales climbed 33.8% in the period, versus a forecast of 32%.
  • Fixed-asset investment rose 35%, well below a projection of 40.9%.
  • The jobless rate was 5.5% at the end of February, up from 5.2% in December.
  • The CSI 300 Index pared an earlier loss of as much as 1.5% after the data dump to trade 0.8% lower as of 10:25 a.m. in Shanghai.
  • The yuan was little changed in both onshore and offshore markets.

The weaker-than-expected investment growth and rise in unemployment points to an uneven recovery. While consumer spending has picked up, the rebound in retail sales hasn’t been as strong as industrial production. Average growth in retail sales in the first two months of the year was 3.2% higher than the same period in 2019, compared with 8.1% for industrial output, according to the statistics bureau.

China is the only major economy to power out of the pandemic after gaining an early control over the virus, and then benefit from surging global demand for medical goods and work-from-home devices. The economy grew 2.3% in 2020 and is forecast by economists to expand 8.4% this year.

The government is targeting more modest growth of “above 6%” in 2021, allowing officials to focus on managing financial risks in the economy, including bringing down debt and curbing asset bubbles. Beijing has signaled it wants to scale back its pandemic stimulus, with analysts predicting a gradual reduction in monetary and fiscal support.

Another factor complicating the data in the first two months of the year was the imposition of travel restrictions before the Lunar New Year break, which fell in February. To curb sporadic virus cases in some parts of the country, the government discouraged people from making their annual trips home for the holidays.

That likely helped to boost industrial output, with factories able to remain open or resume production earlier than usual to meet soaring export demand. But it also suppressed spending on travel, restaurants and leisure activities as millions of people refrained from booking train and air tickets and cut back on hosting banquets and buying presents.

Through March 8, people took almost 41% fewer trips this year than in 2020, according to data from the Ministry of Transport, and travel was down almost 71% compared to the same period in 2019.

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