The Chinese economy has shown clear signs of policy-driven momentum at the start of the year, with positive signals emerging across multiple sectors including consumption, industry, investment, and real estate. Notably, infrastructure investment growth has accelerated. How has China's economy performed in the early part of 2026? On March 16, the National Bureau of Statistics released economic performance data for January and February, indicating a recovery in several key indicators such as industrial production, consumption, and investment.
On the supply side, the value-added of industrial enterprises above the designated size increased by 6.3% year-on-year during January and February, accelerating by 1.1 percentage points compared to December 2025. On the demand side, the total retail sales of consumer goods reached 8,607.9 billion yuan, a year-on-year increase of 2.8%, which was 1.9 percentage points faster than the growth rate in December 2025.
Investment has ended its period of negative growth. In the first two months, national fixed-asset investment (excluding rural households) reached 5,272.1 billion yuan, up 1.8% year-on-year, compared to a decline of 3.8% for the entirety of 2025. Excluding real estate development investment, national fixed-asset investment grew by 5.2%.
In terms of employment, the average surveyed urban unemployment rate for January and February stood at 5.3%, unchanged from the same period in 2025. In February, the rate was 5.3%, a slight increase of 0.1 percentage points from the previous month.
"The start has been strong and favorable," stated a spokesperson, indicating that overall, the main economic indicators for January and February showed significant improvement, marking a good beginning for the national economy. However, it was also noted that the impact of changes in the external environment is deepening, geopolitical risks continue to rise, and numerous longstanding issues and new challenges persist in domestic economic development and transformation, with some enterprises still facing operational difficulties.
The early-year economic performance is distinctly characterized by policy drivers. Several experts pointed out that the accelerated repair of economic growth momentum in January and February is largely attributable to the proactive layout of policies aimed at expanding domestic demand and the front-loaded implementation of these policies. For instance, policies introduced at the end of 2025, including a 500 billion yuan policy-oriented financial tool and 500 billion yuan in leftover special local government bond projects, were carried over and advanced in early 2026. Additionally, a series of real estate, fiscal, and financial policies have been intensively rolled out since the beginning of the year, and the first batch of budget quotas for specific initiatives have been allocated in advance, supporting the performance of investment and consumption activities.
Consumption growth has rebounded, and industrial production has accelerated. The 2.8% year-on-year growth in total retail sales of consumer goods for January and February surpassed market expectations, as previous forecasts from several institutions had averaged around 2.4%. The recovery in consumption is closely linked to the high "heat" of Spring Festival consumption. On one hand, the 2026 Spring Festival holiday was one day longer than in previous years, increasing opportunities for leisure and shopping. On the other hand, various consumption promotion activities have been orderly conducted since the start of the year, coupled with the continued effect of trade-in policies, accelerating the release of consumer replacement demand and leading to a growth trend in the consumer market.
Breaking down by consumption type, retail sales of goods amounted to 7,581.5 billion yuan, a year-on-year increase of 2.5%, while revenue from catering services reached 1,026.4 billion yuan, up 4.8% year-on-year. Sales of basic necessities and some upgraded goods grew relatively rapidly. For example, retail sales of clothing, footwear, hats, and textiles; grain, oil, and foodstuffs; communication equipment; and gold, silver, and jewelry by units above the designated size increased by 10.4%, 10.2%, 17.8%, and 13.0% year-on-year, respectively.
Furthermore, according to data from the Ministry of Culture and Tourism, during the nine-day Spring Festival holiday, the number of domestic tourist trips reached 596 million, an increase of 95 million compared to the eight-day holiday in 2025. Total domestic tourism spending reached 803.483 billion yuan, an increase of 126.481 billion yuan from the previous year, setting new historical records for both tourist numbers and spending during the holiday. Data from the Ministry of Transport showed that cross-regional passenger flow during the Spring Festival holiday period totaled 2.81 billion person-trips, with a daily average of 310 million, a year-on-year increase of 8.2%, also a record high.
Despite the current rebound in consumption growth, when viewed over a longer time horizon, the recovery remains in a "weak" phase compared to the frequent double-digit growth rates seen before the pandemic (2019 and earlier). A comprehensive recovery in residents' willingness and ability to consume still requires time. Several experts have indicated that insufficient demand and weak consumption are the principal contradictions in the current economy and society. It was noted during recent national meetings that the domestic contradiction of "strong supply versus weak demand" is quite prominent. From the consumption perspective, influenced by slowing growth in urban and rural residents' income and deep adjustments in the real estate market, household consumption tends to be downward, widening the gap compared to pre-pandemic levels. Both the government work report for 2026 and the Central Economic Work Conference at the end of 2025 placed expanding domestic demand and promoting consumption at the forefront of various tasks. Experts suggest that promoting consumption in 2026 requires systematic efforts from multiple aspects, including increasing income, improving social security, and deepening supply-side reforms.
Apart from the demand side, supply-side data has also improved. The 6.3% growth in industrial value-added was attributed mainly to improved domestic demand, strengthened export pull, and the manifestation of macro-policy effects. Analysis suggests the driving factors for the rise in industrial production include: first, strong growth in high-tech manufacturing; second, resilient exports supporting related industrial demand; third, the visible effects of stable growth policies, with development plans emphasizing the promotion of high-tech manufacturing and industrial upgrading to aid economic structural transformation; and fourth, marginal improvements in manufacturing activities boosting production.
Data shows that the growth of equipment manufacturing has been particularly outstanding, with its value-added increasing by 9.3% in January-February, contributing 47.4% to the growth of all industrial enterprises above the designated size. Value-added in high-tech manufacturing grew by 13.1%, significantly faster than the overall industrial growth rate. Production of digital products manufacturing increased by 8.8%. By product, the output of 3D printing equipment, lithium-ion batteries, and industrial robots saw rapid year-on-year growth of 54.1%, 42.6%, and 31.1% respectively.
Since the beginning of the year, new growth drivers have been accelerating. The cultivation of new productive forces and the growth of new kinetic energy have contributed to the favorable start. For instance, the manufacturing of computers, communication, and other electronic equipment increased by 14.2% year-on-year. The rapid growth of the electronics industry has driven growth in upstream raw material industries, particularly the chemical industry, where value-added grew by 7.6%. Simultaneously, with the development of artificial intelligence and increasing computing power demand, the pulling effect on the upstream energy industry is also evident. The production and supply of electric power and heat power increased by 5.1% year-on-year, accelerating significantly. The driving effect of new kinetic energy on upstream and downstream industries has strengthened. It was also mentioned that with the advancement of green transformation, the production of new energy equipment has accelerated markedly, injecting new momentum into economic growth.
Investment growth has turned positive, and the decline in real estate investment has narrowed. After four consecutive months of negative growth, investment has shown signs of stabilizing. The 1.8% year-on-year growth in national fixed-asset investment marks a turnaround from the 3.8% decline recorded for the full year 2025. By sector, infrastructure investment grew by 11.4% year-on-year in January-February, a sharp reversal from the 2.2% decline in 2025. Experts attribute the significant growth in infrastructure investment as the core driver of the current investment recovery, supported by factors such as project impetus at the start of a new planning period and strengthened funding guarantees.
The year 2026 marks the beginning of a new five-year plan period, with a number of major projects commencing at the start of the year. Concurrently, according to the government work report, the special local government bond quota for project construction will be separately listed and increased in 2026. Additionally, the completion of a 500 billion yuan new policy-oriented financial tool投放 in October 2025 is having a pulling effect on infrastructure investment in early 2026. These factors imply better-guaranteed funding sources for infrastructure investment at the year's start. Overall, it is anticipated that the growth rate of fixed-asset investment in 2026 is expected to stop declining and stabilize, with infrastructure investment growth, which the government has the strongest control over, likely to accelerate significantly.
Data indicates clear improvements in some physical workload indicators since the beginning of the year, such as the operating rates of construction machinery. The operating rates for concrete equipment, hoisting equipment, and road machinery improved year-on-year. The operating rate of cement mill units increased significantly, and apparent consumption of steel grew by 4.2% year-on-year.
Manufacturing investment grew by 3.1% in January-February, compared to 0.6% growth for the full year 2025. The recovery in manufacturing profits throughout 2025 has provided some support for enterprise investment. Furthermore, business survey data suggests that corporate investment intention and hiring intention indices remain somewhat resilient.
In real estate development investment, the year-on-year decline narrowed to 11.1% in January-February, a reduction of 6.1 percentage points compared to the full-year decline in 2025, which had been deepening. Recently, policy signals aimed at stabilizing the property market have been continuously released from the central to local levels. The government work report's stance on real estate shifted towards "focusing on stabilization,"明确ing policy focuses including livelihood保障, coordinated destocking of new and second-hand houses, the delivery of "good houses," new models for real estate development, and reform of the housing provident fund system, forming a合力 with policies introduced by local governments since the beginning of the year.
Local governments have also introduced new property market policies. For example, Shanghai recently implemented new measures放宽 non-local household registration requirements, increasing provident fund loan limits, and optimizing property taxes to boost market confidence.
Changes in housing prices are an intuitive reflection of market sentiment. Data for February 2026 showed that month-on-month prices for new commercial residential buildings in first-tier cities turned from a decline to flat. Prices in Beijing and Shanghai rose slightly, while Guangzhou was flat and Shenzhen declined. The decline in prices in second- and third-tier cities narrowed.
Regarding the full-year outlook for real estate, it is believed that the property market is expected to stop falling and stabilize in 2026. A market outlook report also indicated that 2026, as the start of a new plan period, is expected to see more incremental policies accelerating their landing, helping to promote demand release. It is projected that in the mid-to-later stages of the plan period, real estate may gradually emerge from its adjustment phase.