On January 28, 2026, a staff member sorts packages on a postal sorting assembly line at a postal delivery logistics joint distribution center in Mengshan County, Wuzhou City, Guangxi Province, China. (Photo courtesy of Costfoto/NurPhoto, Getty Images)
Cost Photo | Null Photo | Getty Images
China’s economy got off to a strong start this year, with both consumption and production exceeding expectations, with an early boost from holiday spending and strong external demand.
Data released by the Office for National Statistics on Monday showed retail sales rose 2.8% year-on-year in the first two months of this year, beating economists’ expectations for a 2.5% rise. However, this growth rate reflects a notable slowdown from the 4% growth in the January-February 2025 period.
Industrial production rose 6.3%, beating expectations for a 5% rise in a Reuters poll. Industrial production in the world’s second-largest economy has been a relatively bright spot, thanks to solid external demand, particularly from Europe and Southeast Asian countries.
Fixed asset investment, including real estate, increased by 1.8% compared to the previous year’s forecast of a 2.1% decline. Among fixed asset investments, real estate development investment continued to decline due to the prolonged real estate crisis, decreasing by 11.1% in January and February, slowing down from the 17.2% decline in 2025.
Investment excluding real estate development increased by 5.2% from the previous year, supported by inflows to infrastructure and manufacturing industries.
Fixed asset investment suffered an unprecedented decline in 2025, falling 3.8% year-on-year as a deepening real estate recession and tightening local government borrowing restrictions hampered one of China’s traditional growth engines.
Just last week, Chinese leaders announced their annual economic targets for 2026, lowering their GDP growth target to a range of 4.5% to 5%, the most ambitious target on record dating back to the early 1990s.
According to official data, the urban unemployment rate was 5.3% in the first two months of this year, compared to 5.1% in December.
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