China retail sales show shaky economic recovery
BEIJING: The performance of China’s economy in the first two months of 2024 was mixed, official figures showed Monday, with sluggish household consumption alongside increased industrial production reflecting an uneven recovery.
The highly anticipated comeback after Beijing lifted stringent COVID control measures in late 2022 was less robust than expected, and the world’s second-largest economy now grapples with turbulence in the property sector, high youth unemployment and flagging consumption.
In January and February combined, retail sales— the main indicator of household consumption—increased 5.5 percent year on year, China’s National Bureau of Statistics (NBS) said. But the figure was down from December, which saw an increase of 7.4 percent, and was slightly below the result anticipated by a Bloomberg survey of analysts, who had predicted a rise of 5.6 percent.
The recording period included China’s major Lunar New Year holiday—this year falling in early February—which generally drives a consumption spike in the preceding weeks. Industrial production, meanwhile, was up 7.0 percent year on year in January and February, NBS data showed, beating the 6.8 percent rise in December and the 5.2 percent predicted by Bloomberg. China typically releases combined data for the first two months of the year, due to the Lunar New Year holiday. Fixed asset investment was up 4.2 percent year on year during the period.
The figure is a key indicator for spending on real estate, infrastructure, equipment and machinery— sectors in which Beijing has sought to stimulate activity of late.
Investments specifically in property development, however, were down nine percent year on year, the NBS said. The property sector—long a vital growth engine for China’s economy—is now under unprecedented pressure, with several major developers on the verge of bankruptcy and falling prices dissuading investment in real estate.
The country’s urban unemployment rate rose slightly to 5.3 percent in January and February from 5.2 percent in December. The figure was 14.6 percent for the 16-24 age bracket, according to a new criterion that excludes students, introduced after a record high was notched last year. Beijing has set a target of five percent annual growth in gross domestic product (GDP) this year—among the slowest official goals in decades. China’s economy emerged from deflation in February for the first time in six months.