Economic data for January-February 2026 was released on March 16, showing significant improvement compared to the fourth quarter of 2025. Factors including strong export performance, an extended Spring Festival holiday, and the launch of major projects under the 15th Five-Year Plan contributed to the positive momentum. Notably, exports and infrastructure investment both achieved double-digit growth in the first two months, laying a solid foundation for a strong start to the year.
Improved demand has driven a recovery in supply-side indicators. The national service industry production index increased by 5.2% year-on-year in January-February, while value-added industrial output of major enterprises grew by 6.3%, both exceeding 5%. Some institutions predict that first-quarter economic growth could reach around 5%, a notable improvement from the 4.5% growth recorded in the fourth quarter of 2025.
At a press conference on March 16, a spokesperson stated that the economy began the year with strong momentum, trending positively. However, uncertainties in the external environment and domestic supply-demand imbalances persist. The next phase will involve implementing more proactive macroeconomic policies, continuously expanding domestic demand, optimizing supply, and fostering new productive forces to support sustained economic growth.
Economic indicators significantly surpassed expectations. Demand-side data for January-February showed broad improvement, with exports performing particularly well. Investment returned to positive growth, and retail sales of consumer goods accelerated. The total value of goods trade reached 7.7321 trillion yuan, up 18.3% year-on-year. Exports rose 19.2% to 4.6178 trillion yuan, while imports increased 17.1% to 3.1143 trillion yuan.
Analysts noted that the stronger-than-expected export growth was influenced by the timing of the Spring Festival, a low base effect from 2025, industrial upgrades in ASEAN and Belt and Road partner countries boosting exports of machinery, high-tech products, and automobiles, and growing demand from the AI industry driving semiconductor exports.
Fixed-asset investment grew by 1.8% in January-February, rebounding from a 3.8% decline for the full year 2025. Infrastructure investment surged 11.4%, manufacturing investment increased 3.1%, while real estate development investment fell 11.1%. The acceleration in infrastructure investment was attributed to the launch of major projects under the 15th Five-Year Plan.
Retail sales of consumer goods rose 2.8% year-on-year in the first two months, up 1.1 percentage points from the fourth quarter of 2025. Sales of communication equipment jumped 17.8%, supported by policies promoting consumer upgrades. However, auto sales declined 7.3%, affected by a reduction in new energy vehicle tax incentives. Service consumption grew 5.6%, boosted by travel and leisure spending during the extended holiday.
Experts suggest that consumption is recovering steadily, though it remains below potential growth levels. Policy support, such as trade-in programs, is helping to stabilize consumption, but the impact of real estate market adjustments warrants attention.
The strong start to the year sets a positive tone for first-quarter growth. Industrial output and service sector activity both accelerated. Analysts expect first-quarter GDP growth to approach or reach the upper end of the annual target range of 4.5% to 5%, supported by robust industrial performance, strong external demand, and a gradual recovery in investment.
Looking ahead, external demand resilience is expected to help the economy achieve around 5% growth in 2026. Policies are likely to focus on technological innovation and service consumption. Mild inflation recovery will depend on the effectiveness of measures to boost domestic demand.
Despite ongoing challenges, the fundamentals supporting China's long-term economic growth remain intact. With continued efforts to cultivate new productive forces and enhance macroeconomic policy effectiveness, the economy is poised to maintain stable and progressive development.
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