China's industrial output and retail sales grew more than expected in the first two months of 2025, driven by fiscal stimulus, though the property sector remained weak. Industrial production increased by 5.9% year-on-year, exceeding the 5.3% forecast but slowing from December's 6.2%. Retail sales rose 4.0%, up from December’s 3.7%, supported by holiday spending during the Lunar New Year.
Fixed asset investment grew 4.1%, improving from 3.2% in 2024. However, property investment continued to decline, falling 9.8% year-on-year, though less than the 10.6% drop in 2024. Analysts suggest the ongoing correction in the property market will weigh on economic growth in the medium term.
China maintained its 2025 growth target at "around 5%," though concerns persist over external risks, particularly U.S. trade tariffs. Despite recent gains, some economists warn the recovery may be short-lived due to structural challenges.
Policymakers are focusing on boosting domestic consumption to counter external pressures. Measures include a 300 billion yuan ($41.5 billion) consumer goods trade-in scheme and plans to increase household income. However, concerns remain that these measures may only provide temporary relief.
Unemployment rose to 5.4% in February, the highest in two years, highlighting economic strains. Meanwhile, ANZ revised China’s 2025 growth forecast from 4.3% to 4.8%, citing positive economic momentum.
With trade uncertainties persisting, analysts expect continued policy support but no immediate monetary easing. The long-term economic outlook remains uncertain, with growth likely to face uneven momentum throughout the year.