China's economic activity was still sluggish in January and February, according to data released by the National Bureau of Statistics over the weekend.
The country's industrial production and retail sales moderated in the first two months while fixed-asset investment edged up to notch up a weak start for the economy this year, the data showed.
Industrial production grew 5.4 percent from a year earlier in January and February combined, down from 5.9 percent in December to the lowest in at least three years.
Retail sales rose 10.2 percent to 5.29 trillion yuan ($813 billion) in the first two months but the pace was a nine-month low and slowed from the growth of 11.1 percent in December.
But fixed-asset investment rose 10.2 percent to 3.8 trillion yuan in the first two months, faster than gain of 10 percent in 2015.
Wang Baobin, a researcher at the bureau, said the acceleration in fixed-asset investment was due to more capital being pumped into higher-end manufacturing and real estate.
Fixed-asset investment in equipment manufacturing grew 11.3 percent in the two months combined, 1.1 percentage points faster than last year and 3.8 percentage points more than that in the manufacturing sector as a whole.
The real estate sector drew 905.2 billion yuan of investment in the first two months, up 3 percent annually and compared with last year's overall growth of only 1 percent.
Liu Ligang, an economist at Australia & New Zealand Banking Group Ltd, said growing public investment was partially offsetting weakness in the private sector.
"Private fixed-asset investment only increased 6.9 percent, below the headline figure and suggesting that more public investment is being supported by fiscal policy," Liu said. "This also reflected significant weakness in industrial production and fixed-asset investment in manufacturing."
Jiang Yuan, another researcher at the bureau, said China's economic restructuring has attracted high-technology industries which have performed well in the past two months.
Jiang also cited the sluggish global demand for the weak economic activity.
China's foreign trade slumped again in February amid weak global demand. Exports slumped 20.6 percent from a year earlier to 821.8 billion yuan last month, down from the 6.6-percent drop in January, according to the General Administration of Customs.
The government has taken action to bolster the economy such as the central bank unveiling earlier this month a cut in reserve requirement ratio, or the amount of money banks need to hold in reserve, by 0.5 percentage point, freeing 700 billion yuan into the market. It was the first cut since last October and the fifth since February.
ANZ's Liu said that "we still see more reserve requirement ratio cuts in the rest of the year for the government to realize the growth target."
Wang Tao, a UBS economist, said the fragile growth fundamentals will continue to ensure the government intensifies "support for infrastructure investment and promote investment in services and strategic industries."
China is targeting an economic growth of 6.5 percent to 7 percent this year after its economy grew 6.9 percent in 2015, the slowest annual growth in 25 years.
