According to the national economic performance data for January and February 2026 released by the National Bureau of Statistics on March 16, 2026, China’s economy has achieved a strong start to the year. This is reflected in the accelerated recovery of industrial production, optimised investment structure, marginal recovery of domestic demand, and robust foreign trade performance. We believe the better-than-expected economic data are driven by multiple factors, including improved supply-demand dynamics, the timing discrepancy of the Spring Festival holiday, and the front-loaded efforts of macro policies.
Industrial Production Accelerates as New Growth Drivers Gain Momentum
In January and February, the value-added of large-scale industrial enterprises grew by 6.3% year-on-year, 1.1 percentage points higher than that in December 2025. The relatively rapid industrial growth is attributed to two main factors: firstly, the later timing of this year's Spring Festival technically pushed the “rush work-suspension-resumption” cycle later, boosting the year-on-year growth rate for Jan-Feb; secondly, industrial supply and demand matching has improved, driven by the accelerated growth of new growth drivers and stronger export demand. Regarding new quality productive forces, the value-added of high-tech industries grew by 13.1%, and the value-added of equipment manufacturing increased by 9.3%, both significantly higher than the overall industrial level. In key sectors, the manufacturing of computers, communication, and other electronic equipment grew by 14.2%, and the manufacturing of railway, ship, aerospace, and other transport equipment grew by 13.7%, reflecting the continued expansion in the supply of intelligent products and high-end manufacturing.
Investment Turns from Decline to Growth, with Infrastructure and Manufacturing Improving
In January and February, fixed-asset investment (FAI) grew by 1.8% year-on-year, compared to a full-year decline of 3.8% in 2025. Specifically, FAI in infrastructure grew by 11.4% year-on-year, accelerating significantly compared to both the full year 2025 growth and the growth in the same period last year. The notable growth in infrastructure investment is primarily due to two reasons: firstly, the statistical scope for FAI in infrastructure was adjusted this year to include the production and supply of electricity, heat, gas, and water, whereas it was excluded last year; secondly, front-loaded macro policies, with accelerated fiscal fund allocation and increased special bond issuance at the beginning of the year, injected strong momentum into infrastructure investment. FAI in manufacturing grew by 3.1% year-on-year, compared to 0.6% for the full year 2025, supported mainly by strong exports and accelerated investment in high-tech sectors. FAI in the real estate industry declined by 11.1% year-on-year, but the pace of decline narrowed significantly compared to both the full year 2025 and December 2025. FAI excluding real estate grew by 5.2%, reflecting the continued optimisation of China's investment structure.
Consumption Sees Mild Recovery, Service Consumption Performs Better
In January and February, total retail sales of consumer goods grew by 2.8% year-on-year. While the overall growth rate remains moderate, it shows a slight recovery compared to December 2025. In terms of consumption structure, benefiting from the extended Spring Festival holiday, service consumption outperformed goods consumption, with catering revenue growing by 4.8%. In terms of goods consumption, the year-on-year growth rate of retail sales of commodities stood at 2.5%, recovering from the single-month growth rate in December last year, but remaining relatively weak overall. The marginal effect of the “trade-in” policy stimulus has diminished, reflected in relatively weak auto sales, which dragged on the year-on-year growth of retail sales for goods of large-scale enterprises. According to the Government Work Report, the “trade-in” policy will continue this year, with funds already allocated in advance, which will continue to support goods retail consumption in the short term. However, close attention should be paid to the potential impact of diminishing policy effects on goods consumption in the subsequent period.
Export Growth Exceeds Expectations, Product Structure Continues to Upgrade
In January and February, China's goods exports grew by 21.8% year-on-year, the highest growth rate in recent years. The stronger-than-expected export growth is attributed to three main factors: firstly, the timing discrepancy of the Spring Festival holidays between this year and last led to concentrated shipments before the holiday, boosting February's export data; secondly, the recovery in global manufacturing activity boosted external demand, with the global manufacturing PMI rising to 51.9% in February; thirdly, the export tax rebate rates for photovoltaic and lithium battery products are scheduled to be lowered from 1st of April 2026, leading to concentrated shipments by traders during the window period. Although the Jan-Feb export growth was partly influenced by the Spring Festival timing effect and front-loaded shipments, the recovery in global demand remains a key factor supporting China's strong exports. By region, China's exports to ASEAN, the EU, and Africa grew by 29.4%, 27.8%, and 49.9% year-on-year, respectively, in Jan-Feb, while exports to the U.S. fell by 11.0% year-on-year. This reflects a further diversification of the export market structure. By product, exports of mechanical and electrical products and high-tech products grew by 27.1% and 26.9% year-on-year, respectively, in Jan-Feb, indicating the continued upgrade of China's export mix towards higher value-added products and the ongoing enhancement of export resilience.
Note: This report is translated from the Chinese version. In case of any discrepancies, the Chinese version shall prevail.
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