Economy to retain recovery as figures reveal early boost to hit growth target

China’s retail sales and investment growth accelerated in the January-February period, official data showed on March 17, signaling a strong start to the year and offering an early boost for the country’s goal of achieving an annual growth target of around 5 percent.

Officials and economists said the better-than-expected demand and supply performance indicates the economy gained steam in the first two months. It also sets the stage for robust performance in the first quarter, which will also be driven by a steady recovery in domestic demand.

“Compared with the figures in December, we see some moderation in industrial production growth and acceleration in fixed-asset investment and retail sales growth,” said Lu Ting, chief China economist at Nomura. “Since last year was a leap year with one more day in February, the year-on-year growth data might have been a bit higher if adjusted accordingly.”

Retail sales — a key measurement of consumer spending — increased 4 percent year-on-year for January-February after a 3.7 percent rise in December, data released on March 17 by the National Bureau of Statistics (NBS) showed.

China’s value-added industrial output grew 5.9 percent year-on-year in the first two months, after a 6.2 percent increase in December. Fixed-asset investment grew 4.1 percent in January-February, compared with a 3.2 percent rise during the whole of 2024.

“The data supports our forecast of 5 percent year-on-year GDP growth for the first quarter. We expect the country to step up supportive measures after midyear to try to achieve the around 5 percent GDP growth target,” Lu said.

NBS spokesman Fu Linghui told a news conference in Beijing on March 17 that China’s economy is on track to sustain the recovery momentum this year.

Fu said the economy will likely get off to a steady start in the first quarter, thanks to the continued recovery trend, the gradual improvement in domestic demand, macro policies taking effect gradually, and the improvement in market confidence.

Stimulating domestic demand and boosting consumption are among China’s top priorities this year as it seeks to buffer the impact of the United States’ tariff hikes.

On March 16, the General Office of the Communist Party of China Central Committee and the General Office of the State Council, China’s Cabinet, issued a special action plan to boost consumption. According to the plan, the country will ramp up its support for the trade-in program for consumer goods.

In the 2025 Government Work Report delivered during the recent two sessions, China announced it will double ultra-long-term special treasury bonds earmarked for its trade-in program to 300 billion yuan ($41.48 billion) this year.

Speaking at a separate news conference in Beijing on March 17, Li Chunlin, deputy head of the National Development and Reform Commission, said the first 81 billion yuan had been distributed among local governments in early January.

Under the trade-in program, retail sales of new energy passenger vehicles nationwide reached around 1.34 million units in the first two months, while sales of home appliances with high energy efficiency totaled 24.1 billion yuan during the same period, marking a year-on-year increase of 26 percent and 36 percent, respectively, Li said.

Guo Chunli, vice-president of the Chinese Academy of Macroeconomic Research, said, “China’s consumption is projected to see a robust recovery this year, with existing policies taking effect gradually and more stimulus measures in the pipeline.”

She said concerted efforts to stabilize the capital market and reverse declines in the property sector are expected to anchor asset valuations and improve consumers’ willingness to spend.

Guo noted that China is extending its program to upgrade large-scale equipment and trade-in consumer goods while expanding the scope to more consumption fields.

She said new types of consumption related to the debut economy, the ice and snow economy, and the silver economy are providing new consumption momentum.

Tan Guoling contributed to this story.

ouyangshijia@chinadaily.com.cn