China enters fast lane of economic recovery as retail sales pick up

China released its first batch of key economic data for 2023 on Wednesday, showing a stable improvement across the board as the economy has entered a fast lane of recovery following the downgrade of the COVID-19 management in January, building a solid foundation for achieving the full-year GDP growth target of around 5 percent.

“In the first two months, the Chinese economy steadily recovered with rising production demand, stable employment and consumer prices and improved market expectations,” Fu Linghui, a spokesperson with the National Bureau of Statistics (NBS), told a press conference on Wednesday.

According to data released by the NBS, the total value added of the industrial enterprises above the designated size grew by 2.4 percent year-on-year in January and February, or 1.1 percentage points faster than that of December 2022, reflecting the accelerated recovery of industrial production and improved business expectations.

Meanwhile, the country’s fixed-asset investment grew steadily by 5.5 percent year-on-year to reach 5.36 trillion yuan ($776 billion) in the first two months. Specifically, investment in real estate development declined by 5.7 percent year-on-year, which has narrowed compared with 10 percent year-on-year fall in 2022, according to the NBS.

Another highlight is the improvement and rebound in domestic consumption. The total retail sales of consumer goods reached 7.71 trillion yuan ($1.12 trillion), up by 3.5 percent year-on-year, reversing a downward trend in December, NBS data showed.

“The national retail sales excluding car consumption rose 5 percent year-on-year, indicating that the country’s consumption has gained notable momentum along with rebound in consumer expectations and the steady resumption of off-line services,” Zhou Maohua, an economist at Everbright Bank, told the Global Times on Wednesday.

“The confidence in China’s housing market is gradually being regained too,” Zhou said, noting that a positive impact occurred on both the supply and demand sides of the real estate sector as a raft of policy measures took effect.

Chinese shares rose on recovering optimism on Wednesday. The Hang Seng index, which tracks the Hong Kong stock market, jumped 1.58 percent to 19,551.21. In the Chinese mainland, the Shanghai Composite gained 0.55 percent to close at 3,263.31.

“We expect these major activity data to improve further in March,” Nomura economists said in a report sent to the Global Times on Wednesday, projecting China’s GDP will grow by 3.6 percent year-on-year in the first quarter this year.

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