High-rise residential and commercial buildings are under construction near Dongyu Road, Qiantan in Pudong New District, Shanghai, China on March 15, 2024.
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Fixed asset investment rose 4.2%, higher than the 3.2% estimated by analysts.
The unemployment rate in cities was 5.3% in February.
In the first two months of this year, online retail sales grew by 14.4% over the previous year.
Investment in real estate fell by 9% in the first two months of the year compared to last year. Investment in infrastructure rose 6.3%, while investment in manufacturing rose 9.4%.
“Despite significant divergence across sectors, we believe China's continued growth momentum in Q1 remained firm,” Goldman Sachs analysts said in a note on Monday following the data release.
“However, to achieve this year's “around 5%” growth target, more policy easing is needed, especially for demand (eg finance, housing and consumption).”
Despite the encouraging results, National Statistics Spokesperson Liu Aihua warned that domestic demand remains insufficient.
He told reporters that real estate is in a period of “correction” and that the economy as a whole is in a “critical period of recovery, transformation and improvement,” according to a CNBC translation of his remarks in Mandarin.
Asked about the unemployment rate for 16- to 24-year-olds, Liu said the figures would be released a few days after the monthly press conference on economic data.
Economic data for January and February are usually combined to smooth out variations from the Lunar New Year in China, which can fall in any month depending on the calendar year. It is the country's biggest national holiday, with factories and businesses closed for at least a week.
This year, the number of domestic tourist arrivals and arrivals increased compared to last year and compared to pre-pandemic figures from 2019. But Ding Lu, Nomura's chief China economist, pointed out that “average tourism spending per trip is still 9.5% below pre-pandemic levels in 2019.”
Retail sales have not recovered from the pandemic as much as many had hoped, as consumers remain uncertain about their future incomes.
“Consumers were temporarily buoyed by festive spending earlier this year. In the absence of decisive consumption-related stimuli, we think it will be difficult to sustain strong consumer spending momentum this year,” Oxford Economics chief economist Louis Lu said in a statement on Monday.
New loans in February missed expectations and fell from the previous month, “even after adjusting for seasonality,” Goldman Sachs analysts said in a report Friday.
“Continued weakness in property transactions and subdued consumer sentiment may continue to weigh on home loans,” analysts said. “Further monetary policy easing is needed.”
People's Bank of China Governor Pan Gongsheng said earlier this month there was still room to lower the reserve requirement ratio, or reduce the amount of money banks are required to hold on hand.
Goldman expects 25 basis point reductions in that ratio in the second quarter and fourth quarter of this year.
Real estate, which makes up a significant share of housing assets, has slumped in the past few years after Beijing's crackdown on developers who rely heavily on loans for development.
Average property prices for 70 major Chinese cities fell 4.5% from January to February, on a seasonally adjusted, annual basis, according to an analysis by Goldman Sachs, using an average of official figures.
That was steeper than the 3.5% month-on-month fall in property prices in January, Goldman Sachs said.
“Our high-frequency tracker reports that 30-city new home transaction volume is down 53.2% [year-on-year] After adjusting based on the lunar calendar in early March,” the researchers said in a statement.
Chinese officials did not express significant new support for the massive real estate sector at the annual parliamentary meeting that ended last week.
Instead, Beijing emphasized the country's focus on developing manufacturing and technological capabilities.
Asked on Monday about overcapacity concerns, Liu said China's manufacturing capacity utilization rate was 76% in the fourth quarter, up 0.2 percentage points from a year earlier.
He described the efforts to increase the level of high-quality production as a “strategic decision to achieve high-quality growth”, while noting that efforts are needed to prevent inefficient and ineffective investments in the sector.
China's exports for January and February rose 7.1% in US dollar terms, beating expectations for a 1.9% increase, data showed earlier this month.
Imports rose 3.5% in the period, topping Reuters' forecast for 1.5% growth.
