China continued its upward recovery trend with a double-digit rise in economic activities in the January-February period due to pandemic-distorted figures and a resurgence in market demand.

The country's retail sales of consumer goods, a major indicator of consumption growth, rose by 33.8 percent year on year in the first two months of 2021, according to data from the National Bureau of Statistics (NBS) on Monday.

China's industrial output and retail sales outperformed Bloomberg forecasts of 32.2 percent and 32 percent, respectively, while fixed-asset investment fell short of expectations of a 40.9-percent rise.

The country's value-added industrial output went up by 35.1 percent from the same period a year earlier or by 16.9 percent compared to the same period in 2019, NBS data showed.

This metric is the main gauge of major industrial companies' manufacturing and mining output in the world's second-largest economy, referring to those with an annual business turnover of at least 20 million yuan ($3.07 million) from their main operations.

Monday's economy roundup also showed fixed-asset investment, including capital spent on infrastructure, property, machinery and other physical assets, barreled upward, surging to 35 percent year on year.

The country added 1.48 million new urban jobs nationwide from January through to February, with the surveyed unemployment rate in urban areas coming in at 5.4 percent in January and 5.5 percent in February.

China's producer price index, a measure of factory gate prices, crept up 1 percent year on year in the first two months, while the consumer price index edged down 0.3 percent in the interim.

Exports skyrocketed 60.6 percent in dollar terms in the January-February period on a yearly basis, according to data from the General Administration of Customs. The reading overshadowed the 40 percent median estimate surveyed by Bloomberg.

Imports also secured a sharp gain of 22.2 percent in the interim from a year earlier, dwarfing the 16-percent ascent tipped by economists.

Adjust for base effect

The surge in the year-on-year activity growth was "mainly due to the extremely low base caused by the COVID-19 outbreak," Lu Ting, chief China economist at Nomura, said in an email to CGTN on Monday.

"A simple approach to adjust for base effects is to compare the data this year with data from 2019," Lu said.

He said the growth of industrial output, fixed-asset investment and retail sales was 16.9 percent, 1.9 percent and 6.4 percent in January-February compared with the same period in 2019, which suggested the recovery of industrial output has been much faster than that of retail sales.

"Domestically, the unbalanced recovery is still notable, and the foundation for the economic recovery is not solid yet," NBS said in a statement. It must be aware that the COVID-19 pandemic is still rampaging globally, and the world economy is facing severe challenges, the bureau said.

Lu said, "Beijing's policymakers know these base effects very well. Despite the very strong growth data released today, we believe Beijing will make good on its pledge to make 'no sharp shift' in its policy stance."

Consumption has not yet returned to the level before the pandemic, and the country's stay-put policy in February may have a negative impact on consumption, investment bank UBS said in an email to CGTN on Monday.

People were encouraged to stay put over the Spring Festival holiday to reduce the risk of infections following the resurgence of COVID-19 cases across the country.

During the Spring Festival, people took 25 percent fewer domestic trips this year than in 2019, while travel  consumption plunged over 40 percent, UBS said.

UBS believes consumption is still shifting online, even after the pandemic has been brought under control. People are more willing to spend on daily necessities, fitness, electronics, luxury goods and online entertainment but spend less on travel, dining out, real estate and automobiles, the UBS survey showed.

"As services consumption might pick up after February on the lifting of many social distancing restrictions, retail sales growth could be a bit faster than 26.5 percent," Lu said.

On the other hand, the stay-put approach helped factories secure enough workers after the Spring Festival holiday, thus boosting China's industrial output and export, UBS said.

"The jump in industrial production was also supported by the earlier-than-usual resumption of business activity following the LNY (Chinese Lunar New Year) holiday this year, thanks to the majority of migrant workers remaining in their workplace cities during the holiday," Lu explained.

However, Nomura expects the activity growth data to drop significantly in March due to a higher base. "We may see industrial production and fixed-asset investment growth of 18.3 percent and 12.6 percent, respectively," Lu said.

Modest growth target over 6 percent

In early March, China announced a GDP growth target of over 6 percent for 2021 after skipping it last year due to the onset of COVID-19, nudging most economies into an unprecedented downturn.

Last year, the world's second-largest economy contracted by 6.8 percent in the first quarter amid a national lockdown due to COVID-19 but rebounded soon with a 3.2-percent growth in the second quarter and grew 2.3 percent for the whole year, making it the only major economy in the world to register positive growth in 2020.

A GDP growth target of over 6 percent is not a low bar, Chinese Premier Li Keqiang said last week after the closure of the country's annual legislative session. He said the number was "not set in stone" but put in place to "guide expectations."

Due to the low comparison base from last year and the recovery at home and abroad, the over 6 percent growth target for 2021 is certainly achievable, Xu Hongcai, deputy director of the economic policy commission under the China Association of Policy Science, told CGTN in a previous interview.

China's economy has been widely expected to grow around 8 percent in 2021. However, the 8 percent expansion will not continue next year. Therefore, setting a goal above 6 percent ensures policy consistency for the future, Xu said.

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China targets GDP growth of over 6% in 2021 as economic recovery gathers steam

The Paris-based Organization for Economic Cooperation and Development said in its March report that it expects China's economy, whose rebound contributed to the economic growth in the Asia-Pacific region, to grow by 7.8 percent in 2021 and 4.9 percent in 2022.

In January, the World Bank Group projected that China's economy is on track to tick up by 7.9 percent in 2021 out of "the release of pent-up demand and a quicker-than-expected resumption of production and exports."