Economy on a steady course

A technician works on the assembly line of an electric vehicle manufacturer in Weifang, Shandong province.[Photo by Wang Jilin/for China Daily]

Higher industrial output, retail sales fuel faster-than-expected growth momentum

China's economic growth beat market expectations in the first two months, an indication that the world's second-largest economy is expanding steadily and can achieve its preset growth target of about 6.5 percent, analysts said.

Industrial output posted steady growth in the first two months of this year, up by 7.2 percent year-on-year, 1 percentage point higher than in December and 0.9 percentage point higher than a year ago, the National Bureau of Statistics (NBS) said on Wednesday.

Fixed-asset investment growth was 7.9 percent in January and February combined, 0.7 percentage point higher than the whole of 2017, but 1 percentage point lower than a year ago, NBS data showed.

Retail sales increased by 9.7 percent year-on-year in the same period, 0.3 percentage point higher than in December, and 0.2 percentage point higher than the same period of last year, the NBS said.

"The national economy has maintained stable and sound development in the first two months of 2018," said NBS spokesman Mao Shengyong.

"It is a good start for high-quality development" Mao said, referring to the new development philosophy that the country has recently adopted.

Online sales also boomed in the first two months, rising by 37.3 percent year-on-year, 5.4 percentage points higher than a year ago, the NBS data showed.

Real estate investment growth stood at 9.9 percent. It marked the highest growth since March 2015. "Real estate investment growth will be kept relatively stable and it would be difficult for it to continue to rise strongly," said Mao of NBS. "The construction of the long-term mechanism (targeted at achieving stable growth of the sector) is underway and at the next stage, China has favorable conditions to maintain a stable and healthy development of the property market."

Steven Zhang, chief economist of Morgan Stanley Huaxin Securities, said that China's GDP growth could be 6.7 percent in the first quarter of this year, a continuity of the stable trend seen in the fourth quarter of 2017.

Some analysts and China watchers have predicted that the economy would weaken in 2018, but the latest data show that except retail sales growth, all the indicators are higher than market expectations, which proves such pessimism wrong, said Liu Dongliang, a senior analyst of China Merchants Bank.

"The Chinese economy has maintained its resilience since 2017 and we are yet far from becoming pessimistic about the economic prospects," said Liu. "Stable growth can be kept for some time."

He added that the whole-year GDP growth this year could be 6.7 percent to 6.8 percent, a moderate decline from last year's 6.9 percent growth, because infrastructure and real estate investment are expected to fall mildly.