China's economy got off to a strong start in the first quarter with major economic indicators for January-February exceeding expectations, and the economy is showing positive developments on multiple fronts.
First, industrial production and services maintained robust growth momentum. In the first two months, growth rates of value-added industrial output above designated size — and the services production index — both accelerated from December. In particular, industrial output growth picked up by 1.1 percentage points from December, driven by exports, indicating continued strength on the supply side.
Second, exports demonstrated strong resilience, growing 19.2 percent in the first two months — far exceeding market expectations. While the delayed Chinese Lunar New Year holiday and a low comparison base from a year earlier contributed to the rapid growth, improved manufacturing competitiveness was a key factor supporting export expansion.
Third, domestic demand improved noticeably. Driven by a strong rebound in infrastructure investment, fixed-asset investment rose 1.8 percent year-on-year in January-February, reversing a 3.8 percent decline for full year 2024. Retail sales of consumer goods increased 2.8 percent year-on-year, 1.9 percentage points faster than in December. In particular, services retail sales grew 5.6 percent year-on-year, outpacing the 2.5 percent growth in goods retail sales, indicating that services consumption is becoming an important driver of overall consumption.
