Economy picking up pace, NBS data shows

China’s economy is stabilising and picking up pace with a marked improvement in key economic data for the first two months of 2023, the National Bureau of Statistics said on March 15, as consumer spending, investment and industrial output rebounded.

Retail sales — a key measure of consumer spending — surged 3.5 per cent year-on-year in the January-February period, after a 1.8 per cent decline in December, data released by the NBS showed. Fixed-asset investment — a gauge of expenditure on items including infrastructure, property, and machinery and equipment — increased by 5.5 per cent during the two-month period, compared with a 5.1 per cent rise for the whole of 2022. “The uptrend in China’s economic activity was broad-based in January-February, with retail sales and investments more or less in line with expectations,” said Louise Loo, China lead economist at British think tank Oxford Economics.

Citing official data, she said that factory output also accelerated after decelerating for three months, consistent with the improving purchasing managers index data for the January-February period and reports of easing of supply chain bottlenecks.

According to Loo, modest industrial production reflects weakness in external demand. China’s industrial output — a gauge of activity in the country’s manufacturing, mining and utilities sectors — grew by 2.4 per cent in the January-February period from a year earlier after a 1.3 per cent rise in December, slightly lower than the 2.6 per cent anticipated by a Reuters poll. Lu Ting, chief China economist at global financial services group Nomura, said the January-February activity data shows improvement across the board from the fourth quarter of 2022.

However, due to shrinking exports and a still-weak property sector, the recovery pace has not been very strong. “We expect these major activity data to improve further in March. We expect the State Council (China’s Cabinet), to maintain a supportive yet restrained policy stance in the coming months,” Lu said. China has set an economic growth target of around 5 per cent for 2023, which officials and analysts believe is a pragmatic and achievable goal. The nation’s economy had expanded by 3 per cent year-on-year in 2022.

NBS spokesman Fu Linghui said that China’s potential growth rate is widely projected to stay between 5 per cent and 7 per cent, and the country has the conditions, foundation and confidence to achieve the target this year despite challenges.

At a news conference in Beijing on March 15, Fu said the foundation for economic recovery is “not yet solid”, and more efforts will be made to advance the overall improvement of economic performance, with a key focus on boosting domestic demand and actively expanding opening-up.

Wen Bin, chief economist at China Minsheng Bank, said the nation’s GDP growth will likely hit 5.5 per cent or higher this year, with supportive policies taking effect gradually and improving market confidence.

Looking ahead, global executives have voiced strong confidence and optimism for a robust 2023. Zhang Xiqiang, CEO for China at Nestle SA, said the company is now “even more confident of and committed to the Chinese market and the country’s economy”, with the optimisation of Covid-19 response measures and the determination for wider opening-up.

“We are very optimistic about regaining consumption capacity, given the resilience and vitality of the Chinese economy,” Zhang said, adding that Nestle plans to roll out more than 200 new products in the Chinese market this year.

Xu Yang, president for China at Danish engineering company Danfoss Group, commended the opening-up measures drafted by China’s top policymakers and the focus on the protection of intellectual property rights, saying that these have strengthened their long-term confidence in the Chinese market.

Xu said that Danfoss is committed to long-term investment in China, and its recent announcement to invest 100 million euros ($105.8 million) to build a model plant in Nanjing, Jiangsu province, is a clear sign of the company’s positive outlook on the Chinese market.

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