By Gina Lee
Investing.com – China’s factory production, retail sales, and fixed asset investment beat expectations in the first two months of 2022. The growth came despite the country’s latest COVID-19 outbreak, a property market downturn, and growing global uncertainties.
National Bureau of Statistics (NBS) data released on Tuesday showed that Chinese industrial production grew 7.5% year-on-year in January-February 2022, the fastest pace since June 2021. Forecasts prepared by Investing.com predicted a growth of 3.9% while a growth of 4.3% was recorded for December 2021.
Retail sales grew 6.7% year-on-year, also the fastest since June 2021, due to rising demand during the Lunar New Year holidays and the Beijing Winter Olympics. This contrasts with the 1.7% growth in December 2021 and forecasts prepared by Investing.com that predicted a growth of 3%.
The data also showed that fixed asset investment rose 12.2% year-on-year, compared with the 4.9% growth in December 2021, the highest since July 2021. Forecasts prepared by Investing.com predicted a growth of 5%. The unemployment rate rose to 5.5% in January-February, above the 5.1% that was recorded in December 2021 and predicted in forecasts prepared by Investing.com.
“Overall, the economy had good recovery momentum in January and February,” NBS spokesman Fu Linghui said in a statement. However, the “external environment still remains complex and grim, and there are many risks and challenges faced by China’s economy,” the statement added.
However, the latest COVID-19 outbreak, and ensuing lockdowns, could spread to more cities and impact economic growth, warned some investors.
"I don't think we should be fooled by the surprisingly strong Jan-Feb data... We should still cut interest rates and reserve requirement ratios as soon as possible," Zhongyuan Bank chief economist Wang Jun told Reuters. "There should not be any hesitation in terms of the support from loosening policies."
The People's Bank of China also kept the one-year medium-term lending facility unchanged at 2.85%, going against expectations for a cut.
China’s factory activity is normally slow during the first two months of the year due to the Lunar New Year holidays. However, many workers did not travel during the holiday due to COVID-19 prevention measures, which kept productivity levels up.