BEIJING (BLOOMBERG) – China’s economic activity surged in the first two months of the year, underscoring the strength of its V-shaped recovery a year after the world’s first coronavirus lockdown.
The official figures released on Monday (March 15) are distorted by comparisons from a year ago when the economy came to a virtual halt to control the first outbreak of Covid-19. Growth has since rebounded on the back of strong industrial output and export demand.
Industrial production jumped 35.1 per cent in January-February from a year earlier, compared with a median estimate of 32.2 per cent in a Bloomberg survey of economists.
Retail sales climbed 33.8 per cent in the period, versus a forecast of 32 per cent.
Fixed-asset investment rose 35 per cent, well below a projection of 40.9 per cent.
The jobless rate was 5.5 per cent at the end of February, up from 5.2 per cent in December.
China posted record contractions in the data a year ago when business came to a halt, first because of the usual Lunar New Year holiday break, and then the virus lockdown.
With the pandemic now under control domestically and the economy mostly reopened, comparisons with a year ago make it difficult to assess the true momentum of the recovery, especially for consumers.
China is the only major economy to power out of the pandemic after an early control over the virus and then surging global demand for medical goods and work-from-home devices. The economy grew 2.3 per cent in 2020 and is forecast by economists to expand 8.4 per cent this year.
The government is targeting more modest growth of “above 6 per cent” in 2021, allowing officials to focus on managing financial risks in the economy, like bringing down debt and curbing asset bubbles. Beijing has signaled it wants to scale back its pandemic stimulus, with analysts predicting a gradual reduction in monetary and fiscal support.
Another factor complicating the data in the first two months of the year was the imposition of travel restrictions before the Lunar New Year break, which fell in February. To curb sporadic virus cases in some parts of the country, the government discouraged people from making their annual trips home for the holidays.
That likely helped to boost industrial output, with factories able to remain open or resume production earlier than usual to meet soaring export demand. But it also suppressed spending on travel, restaurants and leisure activities as millions of people refrained from booking train and air tickets and cut back on hosting banquets and buying presents.
Through March 8, people took almost 41 per cent fewer trips this year than in 2020, according to data from the Ministry of Transport, and travel was down almost 71 per cent compared to the same period in 2019.