China retail sales rebounds after Covid-19

China’s industrial output and retail sales surged in the first two months of the year, official data showed yesterday, underscoring the country’s recovery from the COVID-19 pandemic. Industrial production spiked a forecast-busting 35.1 percent on-year, the biggest bounce in decades, while retail sales also beat expectations with 33.8 percent growth.

However, the Chinese National Bureau of Statistics said the latest surge was in part due to distortions from last year’s “low base in the same period.”

Both indicators fell in the early months of last year after COVID-19 surfaced in central China and spread rapidly across the nation.

However, the world’s second-largest economy became the first to bounce back globally after imposing strict lockdowns and virus control measures, clocking a full-year economic growth of 2.3 percent.

“After removing the base effect, the growth of main indicators is stable and macro indicators are in a reasonable range,” the bureau said.

Data for January and last month were released together to eliminate the influence of uncertainties brought about by the Lunar New Year holiday, which typically falls within this period.

Industrial activity was likely boosted by the fact that many migrant workers were discouraged from returning to their hometowns because of COVID-19 restrictions, meaning some factories remained open through the holiday or reopened sooner.

“We expect activity to remain strong in the near-term, as the easing of virus restrictions boosts consumption and fiscal stimulus among key trading partners should keep exports strong,” Capital Economics senior China economist Julian Evans-Pritchard said.

Urban unemployment rose to 5.5 percent last month, up from 5.2 percent in December, data showed, but experts said the real rate might be higher owing to the high number of workers in unofficial employment.

“Even though we do see improvement on the global economic environment, they are still very cautious,” Oversea-Chinese Banking Corp (華僑銀行) Greater China head economist Tommy Xie (謝東明) said on the issue of unemployment.

While urban unemployment rate remains within the government’s target, the caution was likely due to another potential record number of graduates entering the job market this year, he said.

He added that there is an “uneven recovery” ongoing as well, with smaller firms and industries, such as travel, not fully recovered from the pandemic hit.