BEIJING, Mar 17 (Reuters): China's retail sales growth quickened in January-February in a welcome sign for policymakers' efforts to boost domestic consumption even as joblessness rose and factory output eased, underscoring the strains on an economy facing fresh US trade pressure.
Policymakers have put expanding domestic demand as the top priority this year as they try to cushion the impact of the Trump administration's tariffs on its crucial export engine.
China's top leaders have maintained an economic growth target of "around 5 per cent" for 2025, but analysts say that may be a tall order given pressure on exports, tepid household demand and a protracted property crisis.
The data followed weaker-than-expected exports and inflation indicators earlier this month, highlighting the need for more policy support to foster a sustainable economic recovery.
"The risk to the economy is the damage from higher US tariffs on China's exports which will likely show up in the trade data over the next few months," said Zhiwei Zhang, chief economist at Pinpoint Asset Management.
"I think Beijing will continue its current policy stance. There is no urgency to loosen monetary policy by cutting RRR or interest rate at this stage," he said, adding that policymakers may choose to wait for a few months before cutting rates given the trade uncertainties.
Data released by the National Bureau of Statistics (NBS) on Monday showed retail sales, a gauge of consumption, rose 4.0 per cent in the January-February period, better than a 3.7 per cent rise in December and marking the quickest rate since November 2024. Analysts had expected retail sales to grow 4.0 per cent.
Household consumption in the first two months was buoyed by holiday spending during the 8-day Lunar New Year holidays, when China's box office raked in record takings with animated hit "Nezha 2".
The line charts shows China's industrial output and retail sales for a specific time period.
In the annual parliament meeting earlier this month, China's leaders pledged stronger fiscal and monetary support for the economy, with a particular emphasis on spurring domestic consumption.
Among other measures, they have lined up 300 billion yuan ($41.5 billion) for a recently-expanded consumer goods trade-in scheme for electric vehicles, appliances and other goods.
"Retail sales growth was decent, reflecting the vital role of subsidies in supporting home appliance and mobile phone sales," said Tianchen Xu, senior economist at the Economist Intelligence Unit.
However, the effect of the scheme may "fade over time", with auto sales already down in the first two months, he added.
