Steady economic growth for start of the year

China’s economy showed steady growth in the first two months of the year, as industrial output and consumption grew at a faster pace, while growth in services and investment slowed slightly but remained stable.

Industrial output expanded 7.2 percent year on year over the January-February period, 1 percentage point faster than the pace of December, data from the National Bureau of Statistics showed yesterday.

“The mining industry turned to positive growth and manufacturing developed at a faster pace,” said Jiang Yuan, senior industry statistician at the bureau.

“The high-tech sector showed a 11.9 percent year-on-year growth, which is 4.7 percentage points faster than the growth of industrial output, and consumer goods manufacturing also showed a rapid increase.”

Economists of Australia and New Zealand Banking Group said in a note that improving performance in the state-owned enterprise sector helped to lift industrial production growth.

During January and February, fixed-asset investment grew 7.9 percent year on year, up 0.7 percentage points from the level of the whole year 2017 while falling by 1 percentage point from the same period of last year.

Infrastructure investment, which accounts for over 20 percent of the total fixed-asset investment, rose 16.1 percent year on year for the two months, slowing down slightly but remaining a steady growing trend.

Investment in property development rose 9.9 percent from a year earlier, up 2.9 percentage points from 2017 as a whole, the statistics bureau said.

Mao Shengyong, spokesman for the bureau, said the property market including the overall housing price is relatively stable, and real estate investment maintained a reasonable growth after a period of adjustment and control.

Sales of consumer goods showed active growth, with sales of products related to consumption upgrading soaring.

One of the main contributors to retail sales growth was auto sales. While the total volume of sales only saw modest climb, the average sales price jumped, indicating that the demand for cars is more quality-oriented, according to Mao.

Output of new-energy vehicles surged 178.1 percent year on year during the period, while industrial robots production jumped 25.1 percent, the data showed.

The Consumer Price Index, a main gauge of inflation, rose 2.2 percent in the two months from a year ago, with the margin of increase up 0.5 percentage points from a year earlier.

Foreign trade in January and February rose 16.7 percent year on year to 4.52 trillion yuan (US$716 billion). Imports increased 15.2 percent and exports jumped 18 percent, the bureau said.

Mao said the data indicate a steady and better-than-expected economic growth in general, and the bureau is confident in achieving the goal of a 6.5 percent annual growth in 2018 and creating more jobs.

“The consumption upgrading, as a leading role, is enhancing its positive influence on economy,” Mao said. 

“And the growth of new kinetic energy is conducive to the steady development in economy and the optimization and upgrading of economic structure.”

Meanwhile, conditions for high-quality economic development have prospered, buoyed by the overall economic growth, he added. 

“But we still see challenges in extending this positive growth including the employment pressure especially in traditional industries,” Mao said.

ANZ pointed out that Sino-American trade tensions still pose a near-term risk to China’s growth momentum.

China’s power generation saw faster growth in the first two months, with electricity from clean energy sources expanding at a rapid pace, according to the bureau.

In January and February, power production rose 11 percent, 4.7 percentage points faster than the same period in 2017. The growth was also the highest since August 2013.

Electricity from thermal power plants, which accounts for 77 percent of all the power generation, jumped 9.8 percent, 2.8 percentage points higher than the same period of last year.

Electricity from hydropower plants climbed 5.9 percent, compared with a 4.7 percent decrease registered for the first two months of last year.

Nuclear, wind and solar power production surged 17.9 percent, 34.7 percent and 36 percent respectively. Coal output increased 5.7 percent to 520 million tons, compared with the 1.7 percent year-on-year decline in the first two months of last year.

Natural gas output rose 4.9 percent to 26.19 billion cubic meters, compared with the zero growth registered for the same period of 2017. Crude oil output dropped 1.9 percent, narrowing by 6.1 percentage points from a year earlier.

Amid the drive to restructure and optimize industry, the country aims to reduce overcapacity in traditional sectors such as coal iron, and steel while facilitating growth in emerging areas.

China plans to cut 30 million tons of ineffective steel capacity and 150 million tons of coal capacity this year.