China's economic data for the first two months of 2026, released this morning, revealed several positive trends, demonstrating a steady shift toward innovation-driven and high-quality growth, and setting a solid foundation for the year ahead. These encouraging developments are particularly evident in three key areas.
First, investment has shifted from decline to growth. In the January-February period, national fixed-asset investment, excluding rural households, rose by 1.8% year-on-year, reversing the 3.8% decline recorded for the full previous year. This turnaround was driven by multiple factors, including the launch of major infrastructure projects, which spurred related investment. Infrastructure investment grew by 11.4% year-on-year during the first two months, accelerating by 10.8 percentage points compared to the full-year figure and contributing 3 percentage points to overall investment growth. Meanwhile, industrial upgrading and the development of new growth drivers supported robust investment in high-tech sectors, which expanded by 5.1% year-on-year. Policies aimed at boosting effective investment, such as advancing key projects, supporting large-scale equipment upgrades, and encouraging private investment, have begun to yield results, enhancing both the vitality and sustainability of investment.
Beyond investment, consumption also performed well. Boosted by pro-consumption policies and the Spring Festival holiday, total retail sales of consumer goods increased by 2.8% year-on-year in the first two months, accelerating from the growth rate in December of the previous year, indicating a notable recovery in market sales. Domestic demand remains a key source of potential for China's economy. By stimulating latent consumption and expanding productive investment, this potential can be further unleashed.
Second, foreign trade maintained strong growth. In the January-February period, the total value of goods imports and exports increased by 18.3% year-on-year, significantly faster than the full-year growth rate of the previous year. Despite a volatile international environment and rising external risks, particularly the spillover effects of geopolitical conflicts, Chinese products continued to gain favor in global markets due to their growing competitiveness. Exports to major trading partners, including ASEAN, the European Union, and countries involved in the Belt and Road Initiative, maintained growth rates of around 20%. The resilience of foreign trade underscores the underlying strength of China's economy. By adhering to mutual benefit and expanding economic exchanges, China can further broaden its development space through high-quality Belt and Road cooperation.
Third, industrial production accelerated noticeably. The value-added output of industrial enterprises above the designated size grew by 6.3% year-on-year in the first two months, up 1.1 percentage points from December of the previous year. Among 41 major industrial sectors, 31 saw faster growth, accounting for 75.6% of the total. Additionally, more than 350 out of over 600 key industrial products recorded accelerated growth, representing nearly 60% of the total. The steady development of new quality productive forces contributed to the noticeable acceleration in industrial output, with the majority of sectors and products experiencing a rebound. The real economy forms the foundation of China's economic strength. By strengthening internal capabilities and enhancing competitiveness, China can remain steady and resilient amid global uncertainties.
A strong start boosts confidence. While domestic and international challenges persist, the economic data from the first two months reaffirm that the fundamental conditions supporting China's long-term growth remain intact. Through practical efforts and innovation, China's economy is poised to maintain stable progress and achieve a favorable beginning to the 15th Five-Year Plan period.
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