China's growth bump may dent urgency for more stimulus

China's strong factory output and investment growth at the start of the year raised doubts over how soon policymakers will step up support still needed to boost demand and reach an ambitious growth target.

Industrial output rose 7% in January-February from the same period a year earlier, the National Bureau of Statistics said Monday, the fastest in two years and significantly exceeding estimates. Growth in fixed-asset investment accelerated to 4.2%, strongest since April. Retail sales increased 5.5%, roughly in line with projections.

"With the recovery in these data, policymakers will likely not see the need to do more than what they plan to do," said Michelle Lam, Greater China economist at Societe Generale SA. It will take a "much bigger slowdown" for authorities to shift their policy focus to stimulating household income and spending to support consumption, she said.


The strong industrial and investment figures add to evidence that some parts of the world's second-largest economy are gaining traction after policymakers ramped up stimulus late last year. Earlier, export growth exceeded expectations. The data may also weaken the case for policymakers to loosen monetary policy and lessen the impetus to campaign for domestic consumption to drive growth more, according to analysts.