China’s macroeconomic data turned out brighter than expected in Jan-Feb with industrial production, retail sales and urban fixed assets investment (FAI) above Bloomberg’s consensus forecasts. However, the unemployment rate unexpectedly surged while loans data suggested weak demand persisting, UOB Group's Economist Ho Woei Chen notes. 

Broad based improvement in industrial output, retail sales and investment

"Industrial production may fade in Mar as frontloading unraveled after two rounds of US’ tariffs (10% w.e.f. 4 Feb followed by another 10% w.e.f. 4 Mar). However, there is optimism over China’s success in the high-tech sector as well as more positive view on the government’s resolve to stabilise growth at 'around 5%' this year. On Sun (16 Mar), China issued a 30-point plan to boost consumption." 

"To sustain the positive recovery momentum in Jan-Feb, stimulus will need to be stepped up to offset the impact from US’ tariffs and domestic challenges. The data in Jan-Feb suggests that China’s 1Q25 GDP growth may come close to the 5.4% y/y in 4Q24, compared to our expectation for a slowdown to 4.7% y/y and we expect the momentum to raise the full-year 2025 GDP growth to 4.7% compared to our previous forecast of 4.3%. This will be slightly below the official growth target."