China economy on track for strong March performance: China Beige Book

BEIJING — China’s economy is ending the first quarter on a “strong” note, according to a business survey published by the China Beige Book on Thursday.

“The economy clearly improved in March, thanks to better industrial activity and stronger retail spending,” said Shehzad H. Qazi, chief operating officer at the China Beige Book, a U.S.-based research firm.

China’s official data on retail sales, industrial production and fixed asset investment for January and February beat expectations across the board. Figures for the first two months of the year are typically reported together to account for the week-long Lunar New Year holiday, which follows the agrarian calendar.

The China Beige Book said it surveyed 1,436 businesses between March 1 and 23, split roughly between state-owned and non-state-owned firms.

“China Beige Book’s March data show the economy poised for a strong end to Q1,” the report said. “Revenue growth accelerated atop last month while pricing gains boosted margins.”

The National Bureau of Statistics is scheduled to release first quarter data on April 16.

China earlier this month announced the country would target growth of around 5% for the year. Some analysts said it was an ambitious target given the current level of announced government stimulus.

The China Beige Book found that businesses have pulled back their borrowing due to higher interest rates, but also observed signs of a pause on the lending side.

“Market observers have largely missed the substantial policy easing we’ve tracked over the past year, and now some lenders may be hitting the brakes,” the report said.

“Hiring recorded its longest stretch of improvement since late 2020,” the report said, noting every sector except for services saw job growth pick up.

Retail spending increased in all sub-sectors, except for luxury goods, the report said.

In real estate, the report said that while the residential sector still showed a decline in sales, commercial sales and construction improved significantly.

Manufacturing saw growth in production and domestic orders from February, but export orders fell, the report said.

Official data showed investment into real estate fell 9% in the first two months of the year from a year ago. Investment in infrastructure rose by 6.3% during that time, while manufacturing saw a 9.4% increase.