"Next week in China" fra Lundgreen's Capital

Major Data Releases:

• 16 March: China to hold press conference on national economic performance
• 16 March: China to report March medium-term lending facility (MLF) scale of operations and interest rate
• 16 March: China to report February industrial production volumes
• 16 March: China to report February energy production levels
• 16 March: China to report February investments in fixed assets excluding rural households
• 16 March: China to report February data on real estate development and sales
• 16 March: China to report February total retail sales (TRS) of consumer goods
• 16 March: China to report February house price index
• 20 March: China to report March 1-year and 5-year loan prime rates (LPR)

Next week will be another busy one concerning China’s economic calendar with nine major indicators set for release. Retail activity and fixed asset investment numbers will be closely watched as markets gauge the durability of the recovery in domestic demand following the holidays.

A modest rebound is expected for retail sales in January-February, with year-on-year growth expected at 1.6 per cent (December: 0.9 per cent). Consumption momentum has been supported by holiday-related spending and policy measures. Services in the accommodation and catering, household retail, and cultural and entertainment activities have continued to perform relatively well, with business activity indices improving month-on-month. Products covered by the trade-in and replacement program have also seen faster growth. According to the Ministry of Commerce, the program had benefited over 30.5 million consumers by late February and generated RMB 204.5 billion (USD 30 billion) in sales.

Spring Festival travel provided further support to services consumption. Government data show that average daily domestic tourist trips rose by 5.7 per cent year-on-year during the holiday period, while tourism revenues increased by 5.5 per cent. High-frequency indicators point to a mixed recovery in mobility. Metro passenger volumes across 18 major cities increased by 2.3 per cent in January-February while domestic flight volumes were broadly flat from a year ago. Average daily sales of passenger vehicles improved marginally although remained in contraction. Some discretionary spending categories remained pressured, with February box office revenue declining sharply.

Fixed asset investment is expected to show a seasonal rebound at the beginning of the year. Infrastructure investment may benefit from relatively frontloaded policy support as the issuance of new special-purpose bonds began earlier in 2026 and policy-based financial instruments introduced in late 2025 continue to provide funding. However, constraints on project availability remain evident: newly-signed infrastructure contracts by major construction firms declined year-on-year in January, suggesting that the pipeline of investable projects remains limited.

Real estate investment is likely to stay under pressure. Although the year-on-year decline in new home sales areas across 30 major cities narrowed slightly in January-February, land market activity remains weak, limiting any near-term improvement in property investments. Manufacturing investment may show a marginal increase, supported by a gradual recovery in corporate profit growth and the early disbursement of funds for equipment upgrades, although the impact of “anti-involution” policies is expected to persist.

Equity market performance posted a mixed recovery over the past week. As of Thursday, 12 March, the MSCI China Index rose by 0.97 per cent, while the Shanghai Composite was nearly flat with a 0.12 per cent rise. In contrast, the Shenzhen Component and ChiNext indices picked up by 1.43 per cent and 2.73 per cent, respectively. Small- and large-cap stocks outperformed mid-caps, and value sectors led gains.

Looking ahead, a proactive fiscal policy stance and moderately accommodative monetary conditions are expected to continue in 2026. Market performance will likely remain differentiated as production resumes post-holiday and policy signals from the Mainland’s “Two Sessions” emphasise domestic demand expansion, new productive forces, and structural reforms. Over the medium term, improving fundamentals and sustained policy support should provide a foundation for market stabilisation.

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.

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