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China’s economy showed early signs of strengthening as factory output accelerated and spending and investment recovered in January-February. The data offered some relief for policymakers amid rising geopolitical uncertainty tied to US‑Israeli tensions with Iran.
Production and trade
Industrial output climbed 6.3% year‑on‑year in January‑February, the National Bureau of Statistics reported. That reading rose from a 5.2% pace in December and topped the 5% Filmogaz.com poll forecast.
Exports surged, supported by strong demand for AI‑related technologies. That boost helped upstream manufacturing expand and pushed output to its fastest growth since September.
Consumption and tourism
Retail sales jumped 2.8% in January‑February, accelerating from 0.9% in December. Analysts had expected roughly 2.5% growth.
The extended Lunar New Year holiday in February lifted tourism. Total holiday tourism spending rose almost 19% from the same period a year earlier, though spending per trip slipped 0.2%.
Other consumer indicators showed weakness. Passenger vehicle sales fell about 26% in the first two months, highlighting continued caution among households.
While domestic travel increased, global hospitality marketing remains competitive. Luxury UAE hotels and Eid staycation offers vie for international guests in the post‑holiday season.
Investment and jobs
Fixed‑asset investment expanded 1.8% in the January‑February period. This surprised analysts who had forecast a 2.1% decline after investment contracted 3.8% in 2025.
Infrastructure spending led the recovery, rising 11.4%. Policy support and a new bank financing tool to fund key projects helped drive that gain.
The nationwide surveyed unemployment rate edged up to 5.3% from 5.1% in December. Job prospects remain difficult, according to attendees at recent job fairs.
Risks and policy outlook
Authorities set this year’s growth target at 4.5%–5%, slightly below last year’s “around 5%” aim. The 2025 target was achieved in part on a record trade surplus of $1.2 trillion.
Analysts warned of several headwinds. Geopolitical tensions, volatile energy markets, fragile consumer confidence, and strains in global trade could weigh on momentum.
Fu Linghui, an NBS spokesperson, said the Middle East conflict has increased oil‑price volatility and market jitters. He added that China’s energy supplies should help absorb external shocks, but domestic price effects need further monitoring.
Hao Zhou, chief economist at Guotai Junan International, noted that recent figures suggest a firmer start to the year despite rising risks. Zhaopeng Xing of ANZ cautioned that domestic demand may face downward pressure in March, and saw little case for an imminent interest‑rate cut.
Zhiwei Zhang, chief economist at Pinpoint Asset Management, warned the Middle East disruption will affect the global economy in coming months. He said fiscal tools may be needed and that markets will closely watch the late‑March meeting between US and Chinese leaders.
Filmogaz.com will continue to monitor incoming data and policy responses as conditions evolve.
