View of a container vessel near Qingdao port in East China’s Shandong Province on April 7, 2026 Photo: VCG
Even though March data is not yet fully available, the data from January and February shows that China’s economy is on track for a strong start in the first quarter. The economy performed on steady ground in the past three months, supported by multiple drivers including exports, investment, and consumption.
Policy measures are taking effect and the overall trend points to stable and improving growth this year. Even with increased external shocks, the economy is expected to maintain stable growth in 2026 as new drivers, such as high-tech manufacturing and modern services, continue to gain momentum.
Exports remained an important driver. In January and February, exports in yuan terms rose 19.2 percent year-on-year. Demand from emerging markets, including Africa and Latin America, became more noticeable. Trade with Belt and Road Initiative partner countries rose by 20 percent year-on-year. Private companies also did well, with trade growth of more than 20 percent year-on-year.
Yu Ze Photo: Courtesy of Yu Ze
China’s cross-border e-commerce and strong supply chains have helped exporters. And, investment picked up, too. In January and February, broad infrastructure investment rose by 11.4 percent year-on-year, with major projects from the 15th Five-Year Plan (2026-30) being advanced ahead of schedule, becoming a key engine of investment. This helped stabilize market expectations and provided some protection against external uncertainties.
Consumer spending has been steadily recovering with three key features emerging: consumption expanding into lower-tier markets, a broad recovery in services consumption, and strong support from the trade-in programs.
Retail sales grew 2.8 percent in the first two months, faster than in December. Retail sales of consumer goods in rural areas rose by 3.2 percent, with rural markets emerging as a new driver of consumption. Services have been recovering more quickly. Services retail sales expanded by 5.6 percent during the same period.
Trade-in programs that encourage replacing old goods helped boost sales of home appliances. Sales of high-energy-efficiency household appliances continued the rapid growth seen in 2025, with year-on-year increases exceeding double digits.
Industrial production rose in tandem, new economic drivers continued to strengthen, and investment in high-tech industries and high-end services showed strong growth. Equipment manufacturing and high-tech industries have been growing faster than overall industry.
The value-added of high-tech manufacturing enterprises above designated size rose by 13.1 percent year-on-year. Meanwhile, the digital and intelligent transformation of industry has been progressing steadily, and green products, led by new-energy vehicles, have seen strong growth.
In January and February, the services production index rose 5.2 percent year-on-year, slightly faster than in December. In February, the services business activity index reached 49.7, up 0.2 points from the previous month, while the activity expectations index stood at 55.8.
Sectors such as accommodation, catering, culture and sports, and entertainment all recorded business activity indices above 60, indicating high momentum.
Growth in artificial intelligence notably boosted demand for information services. In the first two months, the production index for information transmission, software, and IT services rose by 10.1 percent year-on-year, continuing the sector’s strong growth over the past two years.
Will the strong growth momentum continue in the next quarters?
On one hand, the overall logic of China’s economic operation has not changed, and the rebound in infrastructure investment will help sustain a generally stable and positive growth trend for 2026, following the pattern seen in 2025.
On the other hand, there are market concerns that global oil price volatility could disrupt supply and shipping chains. Such shocks are primarily input cost pressures, which would affect mid- and downstream companies but would not alter the underlying dynamics of China’s economy.
The country’s complete industrial and supply system provides more options for exports. Calculations show that even if international oil prices remain in the $100-140 per barrel range throughout the year, the overall impact on China’s economy will be manageable. On this basis, the strong start in the first quarter is expected to be sustained, and China’s economy is likely to maintain stable growth throughout the year.
The author is deputy dean of the School of Economics at the Renmin University of China and a member of the China Macroeconomy Forum. bizopinion@globaltimes.com.cn