Summary:

• China’s statistics bureau said the economy has made a “sound start” to 2026.

• Industrial output and retail sales beat expectations earlier in the day.

• Officials cited technological innovation and AI as supporting growth.

• Authorities warned the economy still faces “strong supply, weak demand.”

• Consumption is expected to rise as policy support measures take effect.

• The government may need additional steps to strengthen demand.

• China said its energy supply capacity is sufficient despite global volatility.

Chinese officials said the economy has started the year on a relatively solid footing but acknowledged that weak domestic demand remains a key challenge despite stronger industrial activity.

Speaking after the release of China’s latest economic data, a spokesperson for the National Bureau of Statistics said the economy had made a “sound start” to 2026, supported by what officials described as the development of “new productive forces,” including technological innovation and advances in artificial intelligence.

The remarks followed data showing industrial output rose 6.3% year-on-year in January–February, beating market expectations for a 5.0% increase. Retail sales also exceeded forecasts, rising 2.8% compared with expectations of 2.5%.

Despite the better-than-expected headline figures, officials cautioned that China’s economic recovery remains uneven.

The statistics bureau said the economy still faces the challenge of “strong supply but weak demand,” reflecting subdued household spending and lingering caution among businesses.

Authorities expect consumer activity to gradually strengthen over the course of the year as policy support measures begin to take effect. Officials said government initiatives aimed at boosting household incomes and supporting consumption should help improve the overall price environment.

However, the spokesperson acknowledged that further policy support may still be required to fully revive domestic demand.

China’s leadership has increasingly emphasised consumption as a key driver of economic growth, particularly as the country’s property sector continues to struggle and global trade conditions remain uncertain.

The statistics bureau also addressed concerns about energy markets amid global volatility linked to geopolitical tensions.

Officials said China’s energy supply capacity remains sufficient to cope with fluctuations in global prices, suggesting policymakers are confident the country can manage potential disruptions in international energy markets.

Overall, authorities said they expect the economy to maintain a broadly steady growth trend through the remainder of the year.

The comments underline Beijing’s effort to balance a cautiously optimistic tone following stronger industrial data while acknowledging structural challenges tied to weak domestic demand and the ongoing property sector downturn.

This article was written by Eamonn Sheridan at investinglive.com.