Industrial output surges 35% in first two months

Continuous policy support needed to sustain momentum with economic recovery well on track

China’s economic recovery remained well on track in the first two months of the year, with surging industrial production and consumption, boding well for the world’s second-largest economy’s first-quarter growth results, officials and experts said on March 15.

But the jump in economic indicators, largely due to a low comparison base, cannot hide the lingering difficulties faced by small businesses and hardhit sectors, making continuous policy support imperative, they said.

China’s industrial production, retail sales and fixed-asset investment all jumped more than 30 percent in the January-February period from a year earlier, when COVID-19-induced lockdowns suspended economic activity, the National Bureau of Statistics said on March 15.

After deducting the effect of a low comparison base, major economic indicators grew steadily in the first two months of 2021, said Liu Aihua, a spokeswoman for the bureau.

Economic growth may “rally sharply” in the first quarter of the year, Liu said, citing that exports and industrial production expanded fast while consumption and investment recovered steadily.

Industrial output surged 35.1 percent year-on-year in the first two months, compared with 7.3 percent in December, the NBS said.

The January-February output represented 16.9 percent growth compared with the level in the same period of 2019, as well as annual average growth of 8.1 percent in the past two years, the bureau said.

Retail sales grew by 33.8 percent in the first two months, versus 4.6 percent in December and sending the twoyear average growth to 3.2 percent, the bureau said.

Li Qilin, chief economist at Shanghai-listed Hongta Securities, said the industrial production and retail sales figures have exceeded market expectations and signaled that the economy will gain more traction.

Further COVID-19 containment domestically will boost consumers’ demand for offline services, while the global recovery fueled by stimulus measures will strengthen demand for China’s exports, Li said.

Iris Pang, chief China economist at Dutch bank ING, said the pickup in retail sales showed that consumption is on a recovery track even though social distancing measures remain in place.

Consumption will be a growth stabilizer for China this year and help offset the potential bumps in external demand, Pang said, adding that she expects China’s economic growth to hit 12 percent year-on-year in the first quarter of 2021.

Though projecting double-digit economic growth in the first quarter, experts said some sectors are still suffering from the impact of COVID-19, and called for policies to remain supportive in order to revitalize businesses and address the unbalanced recovery pattern.

Lu Ting, Nomura’s chief China economist, said he expects the Chinese government to see through the high growth figures due to a low base and stick to the “no sharp shift” commitment, with neither hikes nor cuts to policy interest rates this year.