China’s Economy Grows Faster Than Expected on Strong Demand for Exports
Industrial production, a rough proxy for economic growth, expanded by 7.2% in January and February from a year earlier
BEIJING—China’s economy expanded faster than expected in the first two months of 2018, helped by strong overseas demand for Chinese goods, though economists warned trade tensions with the U.S. threaten to derail that momentum in the months ahead.
Industrial production, a rough proxy for economic growth, expanded by 7.2% in January and February from a year earlier, the National Bureau of Statistics said on Wednesday, well above the 6.2% pace in December and forecasts for a 6.1% rise by economists polled by The Wall Street Journal.
China releases combined data for January and February to limit distortions caused by the timing of the Lunar New Year holiday, which fell in January last year and February this year.
Fixed-asset investment and retail sales also showed surprising strength.
“The sharper-than-forecast growth momentum was mainly boosted by robust overseas demand and higher investment from property developers and private investors,” said Ding Shuang, an economist with Standard Chartered.
Fixed-asset investment, a closely watched indicator of construction activity, climbed 7.9% in the two-month period from a year earlier, quickening from a 7.2% increase in 2017 and beating forecasts for a 7% gain. Retail sales grew 9.7% from a year earlier, compared with a 9.4% rise in December and forecasts for 9.6% growth.
The export-demand strength was signaled last week in data showing an unexpected 44.5% surge in exports in February and a widening of China’s global trade surplus.
Economists expect the benefit from overseas demand to fade as U.S. President Donald Trump ramps up trade penalties. Mr. Trump has announced increased tariffs of steel and aluminum products and has vowed to roll out targeted measures against Chinese intellectual property theft.
“Even without a trade war with the U.S., it’s almost impossible for China to maintain over 20% export growth for the rest of the year,” said Standard Chartered’s Mr. Ding.
A Chinese official said Wednesday that China would work with the U.S. on nurturing global economic growth and addressing trade disputes. “The trade imbalances between China and the U.S. are a result of market competition,” said Mao Shengyong, a spokesman at the statistics bureau, in a briefing.
Meanwhile, China’s property sector, which accounts for one-third of the country’s economic growth, again proved its resilience, despite a government crackdown on speculation and a push to establish a property tax.
Property investment, including in commercial and residential real estate, rose 9.9% in the first two months, compared with a 7% pace for the full 2017. Housing sales by value continued to grow at a double-digit pace, although the 15.7% rise was down from a 21.2% gain in December.
Zhao Yang, an economist with Nomura Group , said the real estate numbers were to some extent misleading as growth was partly driven by higher prices for raw materials. Construction starts slowed to 2.9% in the first two months of the year, while land sales to property developers were actually down 1.2% from a year earlier, he said.
Going forward, “the property sector is expected to be a drag on the Chinese economy,” said Mr. Zhao.