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China's factory output surges as recovery accelerates

China's factory output surges as recovery accelerates

A worker wearing a face mask works on a production line manufacturing bicycle steel rim at a factory in Hangzhou, Zhejiang province, China, Mar 2, 2020. (File photo: China Daily via REUTERS)

BEIJING: China's industrial output growth quickened in January to February, beating expectations, as the vast manufacturing sector started 2021 on a firm footing and the economy consolidated its brisk recovery.

Retail sales in the period also rose in a boost to domestic demand, giving a strong lift to business activity on top of the recent upsurge in exports growth.

Industrial output rose 35.1 per cent in the first two months from a year earlier, up from a 7.3 per cent on-year uptick seen in December, data from the National Bureau of Statistics showed on Monday. That was stronger than a median forecast of a 30 per cent surge in a Reuters poll of analysts.

China's ability to contain the coronavirus pandemic before other major economies were able to do so has allowed it to rebound faster, with the recovery helped by robust exports, pent-up demand and government stimulus.

COMMENTARY: China's the only major economy growing this year. That's not enough

While the impressive numbers are in part due to distortions from last year's massive slump in activity, other measures show the recovery is broad-based with industrial output up 16.9 per cent compared with the first two months of 2019, before the pandemic struck.

A National Bureau of Statistics official said that positive factors for China's economy are increasing but the foundation for the recovery is not yet solid.

A rebound in foreign demand drove export growth in February to a record pace, while factory gate prices posted the biggest expansion since November 2018.

READ: China exports spike to highest in decades after COVID-19 hit

China's economic activity is normally distorted and volatile in the first two months because of the week-long Chinese New Year holiday, which fell in February this year.

Retail sales increased 33.8 per cent from a year earlier in the first two months, compared with a rise of 32 per cent tipped by analysts, marking a significant jump from 4.6 per cent growth in December and after a 20.5 per cent contraction for January to February of 2020.

Sales grew 6.4 per cent compared with the first two months of 2019.

READ: China sets 'low bar' for GDP growth, pledges more jobs

Fixed asset investment increased 35 per cent in the first two months from the same period a year earlier, slower than a forecast 40 per cent jump. That compared with 2.9 per cent on-year growth in 2020, and a 24.5 per cent plunge in January to February last year.

Investment grew 3.5 per cent compared with the first two months of 2019.

Private-sector fixed-asset investment, which makes up 60 per cent of total investment, rose 36.4 per cent in January to February, versus a 1 per cent increase for the full year of 2020.

China has set a modest annual economic growth target, at above 6 per cent, well below analysts' consensus forecast of more than 8 per cent this year. It was the only major economy last year to report positive growth, with an expansion of 2.3 per cent.

Chinese Premier Li Keqiang said the focus for growth this year is on consolidating the economic recovery.

Source: Reuters/dv

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