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China’s economy started on a strong footing this year, with consumption and production both beating expectations as holiday spending and strong foreign demand provided an early boost.

Retail sales for the first two months of the year rose 2.8% from a year earlier, according to data from the National Statistics Bureau on Monday, beating economists’ forecast for a 2.5% growth. That growth, however, reflected a notable slowdown from the 4% growth in the January-February period in 2025.

Industrial output climbed 6.3%, also exceeding expectations for a 5% jump in a Reuters poll. Industrial production has been a relative bright spot in the world’s second-largest economy, thanks to resilient external demand, particularly from European and Southeast Asian nations.

Investment in fixed assets, which includes property, advanced 1.8% from a year earlier, compared with the forecast of a 2.1% drop. Within fixed-asset investment, that in real estate development continued to decline as a real estate crisis dragged on, falling 11.1% in January and February, moderating from the 17.2% drop in 2025.

Excluding property development, investment rose 5.2% from a year earlier, supported by flows into infrastructure and manufacturing.

The fixed asset investment saw an unprecedented slump in 2025, declining 3.8% year over year, as a deepening property downturn and tighter constraints on local governments’ borrowing hampered one of China’s traditional growth drivers.

Chinese leadership unveiled its annual economic goals for 2026 just last week, tamping down the GDP growth target to a range of 4.5% to 5%, the least ambitious goal on record going back to the early 1990s.

Urban unemployment rate stood at 5.3% in the first two months this year, official data showed, compared with 5.1% in December.