Data released by the Chinese government on Monday indicates that the Chinese economy demonstrated some improvement in the first two months of the year, despite ongoing weakness in the housing market.

Retail sales increased by 4% in January and February compared to the same period last year, while industrial production saw a 5.9% rise, as reported by the National Bureau of Statistics. These better-than-expected figures helped lift stock markets across Asia.

A spokesperson from the bureau acknowledged the positive direction of the economy but highlighted persisting challenges both domestically and internationally. The imposition of a 20% tariff on Chinese goods by U.S. President Donald Trump could hinder the economy due to its heavy reliance on exports.

The spokesperson mentioned concerns over a difficult external environment, insufficient domestic demand, operational struggles for some companies, and an unstable economic recovery foundation during a news conference.

The Chinese economy has been adversely affected by a long-standing real estate downturn, leading to decreased consumer confidence and spending. Real estate investment dropped by 9.8% in the first two months of the year, according to the statistics bureau.

While real estate prices have shown a slower decline, they have not yet reached a bottom. Both new and existing home prices decreased in January and February, albeit at a slower rate compared to the previous year.

ING bank predicted that real estate prices may stabilize in 2022 but a rapid recovery is unlikely. In light of the recent data, ING's chief Greater China economist emphasized the importance of continued policy support to sustain economic growth.