China economy rebounds from Covid slump as spending picks up

Beijing: China’s economic activity strengthened in the first two months of the year as investment picked up and consumer spending recovered following the ending of Covid restrictions.

Retail sales rose 3.5 per cent from the same period last year, figures from the National Bureau of Statistics showed Wednesday, in line with forecasts and reversing from a 1.8 per cent drop in December. Industrial output growth accelerated to 2.4 per cent in the two-month period, slightly below expectations.

Fixed-asset investment climbed 5.5 per cent during the two-month period, better than the 4.5 per cent estimate and 5.1 per cent growth for the whole of last year. The jobless rate rose to 5.6 per cent following the Lunar New Year holidays, with the rate for young people jumping to a six-month high of 18.1 per cent.

Factories also benefited as logistics bottlenecks and restrictions ended.

“The economy’s circulation is increasingly smooth, production and demand improved markedly, and the economy has stabilized and rebounded,” the NBS said in a statement. “But the external environment is increasingly complex, and the problem of insufficient demand is still prominent.”

The bureau usually combines the data releases for the two months of January and February to avoid distortions from the Lunar New Year holiday, which can fall in either month depending on the year.

China’s CSI 300 Index of stocks gained 0.5 per cent as of 10:16 am local time, while future contracts of 10-year bonds fell 0.1 per cent. The yuan was little changed.

A breakdown of the retail data shows sales of Chinese and western medicine rose the fastest, by 19.3 per cent in the two month period. Sales of petroleum and its products grew 10.9 per cent and catering rose 9.2 per cent.