China's Property Investment Growth Hits Five-Year High Driven by Smaller Cities

Galtero Lara
Marcha 17, 2019

Fixed-asset investment growth was 6.1 percent year-on-year in the combined January to February period, compared with 5.9 percent for the whole of 2018, the NBS said on Thursday.

China combines January and February activity data in an attempt to smooth distortions created by the long Lunar New Year holidays early each year, but some analysts say a clearer picture of the economy's health may not emerge until first-quarter data is released in April.

China's retail sales of consumer goods held steady in the first two months of the year, with strong growth in online sales and the catering sector, official data showed Thursday.

Retail sales had been expected to rise 8.1 percent, easing marginally from December's 8.2 percent pace. Most analysts believe activity may not convincingly stabilise until the middle of the year.

China's own official factory survey, which is seasonally adjusted, showed manufacturing output contracted in February for the first time since January 2009.

Data last week showed exports tumbled the most in three years in February, suggesting USA tariffs on Chinese goods and cooling global demand were taking a greater toll.

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In the first two months of the year, the total volume of imports and exports was 4.5 trillion yuan, influenced by the Spring Festival factor, a year-on-year increase of 0.7 percent, but down by 1.2 percent from last December. China's normally steady unemployment rate rose to 5.3 percent in February, from 4.9 percent in December, with the NBS saying it had expected worse numbers. Previous year investment in infrastructure crumbled as China hit the brakes on major projects such as subway lines and motorways to keep a lid on debt.

Much of the gain appeared due to a bounce in property investment, which quickened to a five-year high of 11.6 percent, though home sales fell.

China is trying to engineer a construction boom to rekindle demand and kickstart the economy, even as it steps up support measures to keep cash-starved smaller companies afloat, ranging from tax cuts to financial incentives for firms which do not cut staff.

But it still remains well below the near 20% growth seen for many years.

Xining, the capital of Qinghai province in central China by the Tibetan Plateau, was the top performer last month with a monthly price increase of 2.3 percent.

On an annual basis, home prices rose 10.4 percent in February, accelerating from a 10.0 percent gain in January.

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