China's Economy Starts Strong in Jan-Feb

China's economy started the year with stronger-than-expected performance in January-February, as industrial output grew 6.3% and retail sales rebounded by 2.8%. Fixed asset investment also expanded by 1.8%, defying expectations of a drop. This positive momentum was partly driven by surging AI-related technology demand and the Lunar New Year holiday. However, underlying concerns remain, including cautious consumer spending, a 26% drop in passenger vehicle sales, and a rise in the jobless rate to 5.3%. Analysts warn of a widening gap between robust external demand and sluggish household consumption. Geopolitical tensions, particularly the US-Israeli war against Iran, are adding a fresh layer of uncertainty by impacting energy prices and global trade, which could affect China's economic outlook in the coming months. Policymakers have set a more modest economic growth target of 4.5%-5% for the year.