Next Week in China: 17-21 March 2025

Major Data Releases:

• 17 March: China to report national economic performance
• 17 March: China to report February industrial production volumes
• 17 March: China to report February energy production
• 17 March: China to report February data on investment in fixed assets
• 17 March: China to report February real estate investments
• 17 March: China to report February retail sales data
• 17 March: China to report February housing prices
• 17 March: Hong Kong to report Q4 2024 gross national income
• 18 March: Hong Kong to report February unemployment and underemployment statistics
• 20 March: Hong Kong to report February consumer price index (CPI)

Next week will be significant for economic data releases, with seven major data points coming from Mainland China. Among these, statistics for Total Retail Sales is particularly noteworthy as the Chinese government vowed to “vigorously expand domestic demand” as its main growth strategy for 2025.

For retail sales, we expect the February figure to increase by around 4 per cent year-on-year, faster than the previous 3.7 per cent pace. Consumption early into 2025 was driven by the ongoing pickup in demand given extended government subsidy programs such as the “old-for-new” appliance exchange. After expanding product categories, household appliance and mobile phone sales revenue nationwide increased by 166 per cent and 182 per cent year-on-year, respectively, over the Spring Festival. Additionally, the prices of small household appliances and communication tools in February rose by 1.0 per cent and 1.3 per cent. Property sales also significantly outperformed the same year-ago period, and the subsequent cycle of real estate take-up is expected to boost retail sales this period.

However, restaurant sales remain weak. Data from the Chinese Culinary Association shows that the performance indices for the restaurant industry in January and February were at 49.13 and 48.71, respectively, below the 50.0 neutral level for seven consecutive months. Moreover, sales of key national retail and restaurant enterprises during the Spring Festival period, as reported by the Ministry of Commerce, grew by 4.1 per cent, slower than 8.5 per cent in 2024 and 6.8 per cent in 2023. Average daily holiday expenditure also declined, indicating a persistent weakness in domestic demand.

For investment in fixed assets, we expect the cumulative year-on-year growth rate for February to rise to 4.5 per cent. By sector, infrastructure investment is anticipated to grow by 5.3 per cent year-on-year and manufacturing investment by 9.3 per cent, while investments in real estate development is projected to decline by 7.4 per cent. Notably, with strengthened policy support for equipment renewal through the issuance of ultra-long-term special national bonds, equipment-related investment may provide incremental growth. The purchase of equipment, tools, and instruments is expected to continue its upward trend, providing support to capital expenditure. Additionally, high-tech manufacturing investment is likely to keep climbing. Furthermore, many internet technology companies have recently published their financial reports and updated their future capital expenditure plans. It is anticipated that leading companies will increase their AI investments following the rise of DeepSeek, which could further enhance the growth of fixed asset investment in the areas of information transmission, software, and information technology services.

Chinese equities slipped over the previous week. As of Thursday, 13 March, the MSCI China Index declined by 2.94 per cent. Meanwhile, the Shanghai Composite Index decreased by 0.41 per cent, the Shenzhen Component Index fell by 0.99 per cent, and the ChiNext Index dropped by 1.78 per cent. During this period, small to mid-cap stocks slightly outperformed large-cap stocks while growth stocks slightly outperformed value stocks. Looking ahead, the government work report from the “Two Sessions” political conference has met expectations. Some measures mentioned during the post-session economic press conference are expected to be implemented soon, such as policy support to boost consumption, reserve requirement cuts, and changes to structural issues in industries to promote the exit of outdated and inefficient production practices. Moving forward, market focus on the economic data will gradually shift towards observing the effectiveness of these policies in stimulating private consumption. Technology-driven growth is likely to remain the market’s main theme throughout the year.

This piece has been co-produced with Yiyi Capital Limited in Hong Kong, a China specialist and a part of a global financial services group.