China's Jan-Feb retail sales pick up as economy navigates tariff strains
BEIJING - China's retail sales growth quickened in January-February in a welcome sign for policymakers' efforts to boost domestic consumption even as joblessness rose and factory output eased, underscoring the strains on an economy facing fresh U.S. tariff pressure.
The data followed weaker-than-expected exports and inflation indicators earlier this month, as a burst of U.S. trade tariffs against key trading partners including China threatens to upend the global trade order.
China's top leaders have maintained an economic growth target of "around 5%" for 2025, but analysts say that may be a tall order given pressure on exports, tepid household demand and a protracted property crisis.
"The risk to the economy is the damage from higher U.S. tariffs on China's exports which will likely show up in the trade data over the next few months," said Zhiwei Zhang, chief economist at Pinpoint Asset Management.
"I think Beijing will continue its current policy stance. There is no urgency to loosen monetary policy by cutting RRR or interest rate at this stage," he said, adding that policymakers may choose to wait for a few months before cutting rates given the trade uncertainties.
Data released by the National Bureau of Statistics (NBS) showed retail sales, a gauge of consumption, rose 4.0% in the January-February period, better than a 3.7% rise in December and marking the quickest rate since November 2024. Analysts had expected retail sales to grow 4.0%.
Household consumption in the first two months were buoyed by holiday spending during the 8-day Lunar New Year holidays, when China's box office raked in record takings with animated hit "Nezha 2".
In the annual parliament meeting earlier this month, China's leaders pledged stronger fiscal and monetary support for the economy.
Policymakers have put expanding domestic demand as the top priority this year. Among other measures, they have lined up 300 billion yuan ($41.5 billion) for a recently-expanded consumer goods trade-in scheme for electric vehicles, appliances and other goods.
"Retail sales growth was decent, reflecting the vital role of subsidies in supporting home appliance and mobile phone sales," said Tianchen Xu, senior economist at the Economist Intelligence Unit.
However, the effect of the scheme may "fade over time", with auto sales already down in the first two months, he added.
The NBS data showed home appliance and audio-visual device sales grew 10.9%, compared with December's 39.3% jump. Catering revenue, however, rose 4.3% underpinned by the festival boost, faster than the 2.7% rise in December.
On Sunday, China unveiled a "special action plan" to boost domestic consumption, featuring measures including increasing residents' income and establishing a childcare subsidy scheme.
Officials from the country's top economic ministries will brief media on consumption-boosting measures later on Monday.
UNEMPLOYMENT, TRUMP WOES
Highlighting the stress facing households, the urban survey-based jobless rate in February climbed to 5.4%, the highest in two years.
U.S. President Donald Trump has piled an additional 20% of tariffs on all Chinese goods and is threatening more action. Exports were one of the lone bright spots for China's economy last year.
With factories shutting down temporarily during the Lunar New Year holidays, China's industrial output grew 5.9% year-on-year in the first two months, slowing from the 6.2% expansion in December. However, it was ahead of expectations for a 5.3% rise.
China publishes data for the two months in a combined release to smooth out the impact of the LNY holidays, which fall in either of the two months.
Fixed asset investment, which includes property and infrastructure investment, expanded 4.1% in the Jan-Feb period from the same period a year earlier, versus expectations for a 3.6% rise. It grew 3.2% in 2024.
The real estate sector remained underpowered, underlining the low confidence.
Property investment fell 9.8% in the first two months of 2025 year-on-year, after tumbling 10.6% in 2024. An NBS spokesperson said the country's housing market faces some pressure despite signs of stabilising. ($1 = 7.2308 Chinese yuan renminbi) (Reporting by Kevin Yao, Ellen Zhang, Yukun Zhang and Ryan Woo Editing by Kim Coghill and Shri Navaratnam)
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