Chinese economy rebounds ahead of Iran crisis

(Sharecast News) - China's economy started the year on the front foot, official data showed on Monday, boosted by strong export demand and holiday spending. According to a slew of figures released by the National Bureau of Statistics, retail sales across January and February rose 2.8%, compared to December's 0.8% increase. The biggest rise since October, it was also ahead of expectations for a 2.5% uplift.

It was, however, still notably lower than the 4% rise seen in the same period a year earlier.

The Lunar New Year holiday in mid-February helped drive the growth. The holiday traditionally sees a spike in spending, including on tourism and travel.

Industrial production, meanwhile, climbed 6.3%, outstripping forecasts for a 5.1% hike and up considerably on the 5.2% growth seen in December. The print tallies with a surge in exports, with data released last week showing a 21.8% spike in dollar terms in the first two months of the year.

Fixed asset investment expanded 1.8%, reversing December's 3.8% slide.

However, the jobless rate ticked up to 5.3% from December's 5.1%, while the house price index was largely unchanged at -3.2%.

Lynn Song, chief economist, Greater China, at ING, said: "Our first data dump of the year showed indicators beating forecasts across the board, largely due to downbeat expectations rather than a particularly robust domestic economy.

"The same themes from the last two years remains in play, where a resilient external environment helps offset relatively slower domestic growth.

"Next month's data will no doubt be watched closely. The market will gauge how the rise in oil prices amid the Iran conflict will impact global growth and inflation. In China, even absent the impact from surging oil prices, we already saw inflation hit a 37-month high. Rising oil prices should only add to this."

The NBS combines January and February's data to account for Lunar New Year, which can fall in either month.