The China Beige Book recently published a business survey indicating that China’s economy is finishing the first quarter on a strong note. The survey, which included 1,436 businesses, revealed improvements in industrial activity and retail spending in March. Official data for retail sales, industrial production, and fixed asset investment for January and February surpassed expectations, pointing to a positive trend in the economy. The National Bureau of Statistics is expected to release first quarter data on April 16, shedding further light on the state of China’s economy.
Despite China announcing a target growth rate of around 5% for the year, analysts have questioned the feasibility of this ambitious goal given the current level of government stimulus. The China Beige Book noted that businesses have reduced borrowing due to higher interest rates, indicating a potential slowdown in lending. The report also mentioned signs of a pause in lending activity, which could impact economic growth moving forward. Market observers have been slow to recognize the significant policy easing seen over the past year, which may contribute to the current lending landscape.
The survey found that employment has seen a positive trend, marking its longest stretch of improvement since late 2020. Job growth has picked up in every sector except for services, indicating a broad-based improvement in the labor market. Retail spending has increased across various sub-sectors, with the exception of luxury goods. In the real estate sector, residential sales continue to decline, but commercial sales and construction have shown significant improvement. Manufacturing has experienced growth in production and domestic orders, although export orders have declined.
Official data revealed a 9% decrease in real estate investment during the first two months of the year compared to the same period last year. However, infrastructure investment rose by 6.3%, and manufacturing investment saw a 9.4% increase. The overall landscape of investments in different sectors underscores the varied performance across the Chinese economy. The China Beige Book’s findings offer valuable insights into the current state of China’s economy, providing a detailed analysis of key sectors and indicators. The upcoming release of first quarter data by the National Bureau of Statistics will further enhance our understanding of China’s economic trajectory.
