General

On the 15th, the National Bureau of Statistics of China announced the performance of the national economy from January to February. A number of indicators have shown positive changes, reflecting that China's economy, which has struggled to make a start, is stabilizing and recovering.

Wen Bin, chief economist of China Minsheng Bank, described the current Chinese economy as "recovering as scheduled.". He said that with the smooth transition of epidemic prevention and control, the economic cycle has accelerated and unblocked, and production demand has significantly improved. In January-February, various indicators in China have comprehensively improved compared to last December.

For example, in the production end, which was significantly affected by the epidemic last year, both the industrial and service industries rebounded. According to customs data, in January-February, the added value of industries above designated size in China increased by 2.4% year-on-year, 1.1 percentage points faster than in December of last year, ending the monthly decline since the fourth quarter of last year. During the same period, China's service industry production index increased by 5.5% year-on-year, from a decrease to an increase compared to December last year.

In terms of demand, due to factors such as the gradual fading of the impact of the epidemic and the continued strength of consumption promotion policies, the total retail sales of consumer goods in China increased by 3.5% year-on-year in January to February, reversing the trend of three consecutive months of decline since October 2022, and continuing to recover from a higher base in the same period last year.

Indicators such as employment and prices, which are closely related to people's lives, are also generally stable. According to customs data, in January-February, the average unemployment rate in China's urban survey was 5.6%, which remained basically stable; The consumer price index (CPI) rose 1.5% year-on-year, in sharp contrast to high inflation in several major economies in the world.

A series of positive changes have effectively boosted market confidence. In February, the purchasing economy index (PMI) of China's manufacturing industry, which is a leading indicator of the economy, rebounded to 52.6%, reaching a high level in recent years. Among them, the PMI of small enterprises has risen to the expansion range for the first time since May 2021. Fu Linghui, a spokesman for the National Bureau of Statistics, said that these situations indicate that the vitality of enterprises and the market have gradually increased.

"The results of China's economic" opening up "have shown some signs, but analysts caution that not only is the international situation still complex, but also some structural problems that have accumulated for a long time in China still exist. China still needs to make efforts to stabilize economic growth.".

The change in the external demand situation is a major uncertainty that China needs to face directly. This year, the global economic outlook has been viewed negatively by major institutions, which inevitably has a certain impact on China's foreign trade. According to customs data, in January and February, China's total import and export volume fell 0.8% year-on-year.

Fu Linghui said that despite great pressure, there are many favorable conditions for China's foreign trade to promote stability and quality. For example, in previous years, due to the impact of the epidemic, the shortage of epidemic prevention materials and consumer electronic products was relatively prominent. Due to China's relatively complete industrial system and strong adjustment ability, production capacity was quickly adjusted to adapt to changes in external demand, leading to high growth in foreign trade.

In addition, China has consistently expanded its opening up and actively promoted economic and trade cooperation with countries around the world, with continuous results. According to customs data, in January and February, China's import and export to countries along the "the Belt and Road" increased by 10.1%, and customs data showed that the export growth was 15.2%, which is conducive to the stability of foreign trade.

Stabilizing employment is also a must answer question for China's economy this year. Although the overall situation is stable, the unemployment rate in China's urban survey in February was 5.6%, up 0.1 percentage points from the previous month.

Fu Linghui explained that this is mainly due to seasonal factors, and there is a need for people to change jobs after the Spring Festival. The change in the unemployment rate between January and February this year is relatively small compared to historical changes.

While the pressure remains unabated, this year China has increased the target of creating new urban employment to around 12 million, the highest in history. Wen Bin believes that although the task is heavy and the pressure is high, there is still support for stabilizing employment: First, after the continuous optimization of epidemic prevention and control, the service industry will continue to resume development and create more jobs; Second, although exports are facing greater pressure, more jobs will be created after policy support is received in areas such as platform economy and real estate development.

Overall, Wen Bin predicted that with the continuous release of policy effects and the gradual improvement of market confidence, the foundation for China's economic recovery will be further consolidated, and the annual economic growth rate is expected to reach around 5.5% or even higher.