Economy shows signs of improvement, as officials outline plans to boost consumer spending

The Chinese economy showed signs of improvement in the first two months of the year, though housing market weakness remained a drag on growth, the government said yesterday, while officials outlined steps they are taking to try to get consumers to spend more.

Retail sales were up 4% in January and February compared to last year, more than forecast. Industrial production rose 5.9%, the National Bureau of Statistics reported. The stronger than expected data helped buoy stock markets in Asia.

A bureau spokesperson said the economy is moving in the right direction but cautioned that challenges remain at home and abroad. U.S. President Donald Trump has put a 20% tariff on Chinese products, which could set back an economy with a high dependence on exports and late on Sunday, he reiterated his intention to push ahead with more tariffs in early April.

“The external environment has become more complex and grim, domestic effective demand is insufficient, some companies are facing difficulties in production and operation, and the foundation for the continuous recovery of the economy is still unstable,” Fu Linghui said at a news conference.

A long-running real estate crisis is weighing on the overall economy, depressing consumer confidence and spending. Real estate investment fell 9.8% in the first two months of the year, the statistics bureau said.

The good news is that real estate price declines have slowed, though they have yet to bottom out. Prices for both new and existing homes fell in January and February, but at a much slower pace than most of last year.

ING bank said it expects real estate prices to stop falling this year but they likely will not rebound quickly.

“February’s data showed that it would be wise for officials not to take their foot off the pedal in terms of policy support,” Lynn Song, the chief Greater China economist at ING, wrote in a report.

The government together with the ruling Communist Party released a plan Sunday to boost consumption. It includes steps to increase spending power by raising earnings and expanding benefits for older people and medical insurance to more people, the official Xinhua News Agency said.

The central government provided a first tranche of 81 billion yuan ($11.2 billion) to local governments in January for rebates to people who trade in old cars or appliances for new ones, said Li Chunlin, the vice chairman of the National Development and Reform Commission.

Earlier this month, the government announced the rebate program, now in its second year, would double to 300 billion yuan in 2025.

The government’s plan includes various initiatives, from accelerating the development of artificial-intelligence related products such as autonomous driving and smart wearables to developing winter tourism in parts of the country that get a lot of snow and ice, Xinhua said.

Che Shiyi from the People’s Bank of China told the news conference that the central bank would use a variety of tools to maintain market liquidity and study the creation of new tools to increase low-cost funding support in key consumption areas. KEN MORITSUGU, BEIJING, MDT/AP