Breakdown and Analysis of China’s Economic Data for January and February 2023

Breakdown and Analysis of China’s Economic Data for January and February 2023



China’s National Bureau of Statistics (NBS) has released economic data for the period from January to February 2023. The generally positive figures indicate that the economy has begun to recover since the lifting of zero-COVID restrictions in late 2022, but also show that there is still a significant amount of work ahead for the country to return to pre-pandemic growth levels. To get more china economy latest news, you can visit shine news official website.

The latest data follows a string of other economic indicators that have been released since the beginning of the year, including the positive activity indices that have buoyed optimism in markets and data on consumption and inflation and come in the wake of an uptick in consumption, travel, and production seen over the 2023 Chinese New Year period.
The industrial output of companies above a designated size (those with a main business income of over RMB 20 million (approx. US$2.9 million) grew 2.4 percent year-on-year in January and February, an acceleration of 1.1 percentage points from December. Although this is a decent recovery from the end of last year, it is much slower than the 7.5 percent year-on-year growth recorded in January to February 2022.

Looking at specific industries in the first two months of 2023, the value-add of the mining industry grew 4.7 percent, manufacturing grew 2.1 percent, and electricity, heating, gas, and water utilities grew 2.4 percent year-on-year.
This uptick in industrial indicators may be the beginning of a longer-term recovery, but it is too early to tell whether this trajectory will continue. The growth of industry value-add decelerated significantly over the course of H2 2022, slowing from a high of 6.3 percent year-on-year growth in September to just 1.3 percent in December. The September figure was itself a recovery from the sharp slowdown experienced as a result of COVID-19 lockdowns in the first half of the year. However, as the main hindrance to industrial output (COVID-19 restrictions) has been removed, it is likely that industry value-add will continue to recover over the next few months, barring any unexpected economic pressures.

At the beginning of March, the NBS also released the manufacturing purchasing manager’s index (PMI), an index compiled through monthly surveys of purchasing managers, reflecting a change in economic trends. In February 2023, the manufacturing PMI reached 52.6, up from 50.1 in January and 47 in December, marking the highest reading since April 2012 (a reading of below 50 indicates a contraction, and above 50 indicates expansion). Moreover, the production PMI reached 56.7, up 6.9 percentage points from January, while construction reached 60.2, up by 3.8 percentage points in January, indicating rapid expansion in these sectors.

Meanwhile, the service industry production index (which measures the change in the service industry output) grew by 5.5 percent in January and February 2023, a significant recovery from the 0.8 percent deceleration recorded in December 2022. This was also faster than the growth recorded in the same period the previous year when the service industry production index grew 4.2 percent year-on-year.

Similar to manufacturing and other industrial sectors, services took a significant hit from COVID-19 restrictions, but unlike industrial sectors, did not experience the same level of recovery in the latter half of 2022. However, indicators from the beginning of 2023 show that activity is picking up. The Caixin China General Services Business Activity Index (the “Caixin services PMI”) rose to 55 in February, up from 52.9 in January and the highest level it had been for seven months. As this index provides “an independent snapshot of operating conditions in services industries such as retail and travel”, this rise signals that hard-hit industries have begun to rebound.

Finally, consumption took a significant hit in 2022 and finding ways of boosting domestic demand has been an area of particular concern for policymakers.

In January and February 2023, retail sales of consumer goods reached RMB 7.7 trillion (approx. US$1.1 trillion), a year-on-year increase of 3.5 percent. This is up from a decrease of 1.8 percent year-on-year in December 2022. However, this growth rate is significantly slower than that recorded a year prior, when retail sales grew 6.7 percent year-on-year in the same period.