High-rise residential and commercial buildings are under construction near Dongyu Road, Qiantan, in the Pudong New District in Shanghai, China, on March 15, 2024.
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Investment in fixed assets rose 4.2%, more than analysts’ forecast of 3.2%.
The unemployment rate in February for the cities was 5.3%.
Online retail sales of physical goods rose 14.4% from a year earlier in the first two months of the year.
Investments in real estate decreased by 9% in the first two months of the year compared to the previous year. Investment in infrastructure grew by 6.3%, while that in manufacturing increased by 9.4% during that time.
“We believe China’s sequential growth momentum remained robust in Q1 despite notable differences across sectors,” Goldman Sachs analysts said in a report on Monday after the data was released.
“However, to deliver the ambitious ‘around 5%’ growth target this year, more policy easing is still needed, especially on the demand side (eg fiscal, housing and consumption).”
Despite the upbeat results, National Bureau of Statistics spokesman Liu Aihua warned that domestic demand remains insufficient.
She told reporters that real estate remains in a period of “adjustment” and that the overall economy is “in a critical period of recovery, transformation and upgrading,” according to a CNBC translation of her Mandarin comments.
Asked about the unemployment rate for people aged 16 to 24, Liu said the figures would be released a few days after the monthly economic data press conference.
Economic data for January and February are usually combined in China to smooth out variations from the Lunar New Year, which can fall in any month depending on the calendar year. It is the biggest national holiday in the country where factories and businesses remain closed for at least a week.
This year, the number of domestic tourist trips and holiday earnings rose compared to last year, as well as the pre-pandemic figures of 2019. But Nomura’s chief economist for China, Ting Lu, pointed out that “average tourism spending per trip is still are still 9.5% below pre-pandemic levels in 2019.”
Retail sales have not rebounded since the pandemic as strongly as many had expected, as consumers have become uncertain about their future incomes.
“Consumers were temporarily pushed by the spending associated with the festivities at the start of the year. In the absence of decisive consumption-related stimulus this year, we think it will be difficult to maintain a steady pace of consumer spending this year,” Oxford Economics chief economist Louise Lu said in a report on Monday.
New loans in February beat expectations and fell from the previous month, “even after adjusting for seasonality,” Goldman Sachs analysts said in a report on Friday.
“Continued weakness in property transactions and low consumer sentiment may continue to weigh on household borrowing,” the analysts said. “More monetary easing is needed.”
People’s Bank of China Governor Pan Gongsheng said earlier this month that there was still room to lower the reserve requirement ratio, or the amount banks must hold in cash.
Goldman expects 25 basis point reductions in that ratio in the second quarter of this year, as well as in the fourth quarter.
Real estate, which accounts for a significant portion of household assets, has collapsed in the past few years following Beijing’s crackdown on developers’ heavy reliance on debt for growth.
The average property price for 70 major Chinese cities fell 4.5 percent in February from January on a seasonally adjusted annual basis, according to a Goldman Sachs analysis using a weighted average of official data.
That was sharper than the 3.5 percent month-on-month decline in house prices in January, Goldman Sachs said.
“Our high-frequency tracking tool suggests that new home transaction volume in 30 cities is down 53.2% [year-on-year] in early March after adjusting based on the lunar calendar,” analysts said in a report.
Chinese officials did not reveal significant new support for the massive real estate sector during the annual parliamentary meeting that ended last week.
Instead, Beijing emphasized the country’s focus on developing manufacturing and technological capabilities.
Asked on Monday about overcapacity concerns, Liu said China’s manufacturing capacity utilization rate was 76% in the fourth quarter, up 0.2 percentage points from a year earlier.
She described efforts to raise the level of high-quality production as a “strategic decision to achieve high-quality development,” while noting that efforts are needed to prevent inefficient and inefficient investments in the sector.
Data earlier this month showed that China’s exports for January and February rose 7.1 percent in U.S. dollars, beating expectations for a 1.9 percent increase.
Imports rose 3.5% during that time, also beating the Reuters forecast of 1.5% growth.
